George Bull

Written by: George Bull

George Bull

Senior Tax Partner

Land and property stamp tax receipts suffer biggest fall since credit crunch

HMRC’s annual stamp taxes statistics for 2018-19 show that total stamp tax receipts fell by 5 per cent to £15,560 million between 2017-18 and 2018-19. Keenly watched data on land and property stamp taxes (SDLT) show a decrease of 7 per cent to £11,940 million. 

This is significant because, until 2018-19, SDLT receipts for both residential and non-residential transactions have increased steadily since the credit crunch and economic downturn. 

Receipts are affected by a number of factors including property price inflation, market activity (transaction numbers) and a series of changes to the tax itself. HMRC estimates that, without first-time buyer’s relief (FTBR) and the devolution of taxes to Wales, the fall would be less than 3 per cent. But that would still be the biggest drop since the credit crunch and economic downturn of 2008-09.

The effect is greatest in respect of residential properties.

Residential SDLT receipts decreased by 10 per cent (£905 million) to £8,370 million between 2017-18 and 2018-19. The decrease in receipts is partly due to FTBR and devolution of SDLT to Wales, as well as the fall in transactions over £1 million, dropping by 8 per cent since last year. In a sign of market slow-down, residential transactions decreased by 6 per cent (70,000) to 1.036 million residential transactions between 2017-18 and 2018-19.

218,900 residential transactions benefited from FTBR in 2018-19, with an estimated £521 million relieved in total. 2018-19 was the first full tax year of FTBR claims. 

Properties valued at £250,000 or less accounted for 59 per cent of all transactions, and 11 per cent of the total SDLT receipts, whilst properties over £1 million accounted for nearly 3 per cent of transactions and over 45 per cent of total SDLT receipts. 

The figures for second homes and let properties tell their own story. In 2018-19 230,600 transactions fell within the regime for higher rates on additional dwellings (HRAD), a decrease of 9 per cent (21,900) from 2017-18. HRAD receipts were £3,810 million in 2018-19, a decrease of 6 per cent (£250 million) from 2017-18. This may be a knock-on effect of private landlords selling let properties, following all the other tax changes affecting that sector.

The downward trend for non-residential transactions is not so severe: receipts decreased by 2 per cent (£60 million) to £3,570 million between 2017-18 and 2018-19. This too reflected the devolution of SDLT to Wales. Non-residential transactions decreased by 5 per cent (6,000) to 115,000 non-residential transactions between 2017-18 and 2018-19.  

Few areas are spared the fall. In England and Northern Ireland, most regions show decreases in SDLT receipts except for East Midlands and Yorkshire & Humberside. Despite the falls, London again accounted for the most SDLT revenue (£4,545 million; 38 per cent of total SDLT receipts).

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