The Government’s takings from stamp duty are up 20% on last year

11th March 2015

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Stamp duty revenues raised on residential properties are projected to be up by over 20% in 2014/15 to a record £8 billion.

Three quarters of all home buyers are liable to pay stamp duty, ranging from nearly all sales in London to around half in northern England and Wales, according to the calculations by Halifax.

London’s share of all revenue raised in the UK increased from 28% in 2006/07 to 42% in 2013/14, while two thirds of all first-time buyer purchases in London are above £250,000 compared with only 1-2% in many regions.

The lender found no evidence so far of a dampening in activity at the very top end of the market following the recent reform of stamp duty.

A higher number of residential property transactions and increased prices are estimated to have brought a further significant boost in stamp duty revenues in the current 2014/15 tax year.

Halifax estimates an increase in revenues from stamp duty on residential sales of over 20% in 2014/15, from £6.45 billion in 2013/14 to a record £8 billion; comfortably exceeding the previous high of £6.68 billion at the peak of the last housing market boom in 2007/08.

This is more than 15 times as much as the £520 million raised by residential stamp duty 20 years ago’ in 1994/95.

Under the new progressive structure of stamp duty introduced on December 4, 2014, no tax is paid on any of the value of a property below the starting threshold of £125,000.Above the first threshold, tax is charged at the relevant rate on the amount by which the selling price exceeds the threshold. This is continued through the various thresholds to the top rate.

Based on the current average house price in England and Wales of£259,708, a typical home buyer pays a total of £2,985 in stamp duty. Under the old flat structure, a buyer paying this price would have been subject to stamp duty payments of £7,791 – a saving of £4,806.

In all regions, buyers are often making large savings. In cash terms ,the largest savings are in London(£4,830) and the South East(£3,843).

The tipping point at which the buyer is worse off under the new structure is £938,000.

The proportions of all sales in each of the bandings in December 2014 and January 2015 are almost identical to those in the preceding three months, said Halifax, which  suggests there are no signs of any marked changes in behaviour as a result of the changes made to stamp duty , although it is early days.

This equally applies at the top end of the market where the proportion of sales in London above £925,000 is unchanged at 9%; suggesting that the increase in stamp duty on such sales is not significantly deterring purchases in this market segment.

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