3% SDLT surcharge raises extra £2bn

Property transactions over the past twelve months have remained largely flat, but the Treasury has gained an extra £2bn in tax due to the 3% stamp duty land tax (SDLT) on additional residential properties, according to analysis by Blick Rothenberg

The firm says HMRC statistics to 31 July 2017 show that the number of property transactions is now 1,204,730, broadly the same as the year to 31 July 2015, but SDLT receipts have increased by 20% in the same period, up from £10.4bn to £12.4bn.

Robert Pullen, director at Blick Rothenberg, said: ‘Some of this increase could relate to general property price increases, but it is likely that the majority relates to the changes from 1 April 2016, which added an additional 3% SDLT for purchases of additional residential properties.

‘The policy intention was always stated to be to realign the residential property market to make it fairer for first time buyers. It is becoming clearer, however, that as prices continue to rise the measure has succeeded only in generating extra tax for HMRC as well as a sluggish property market evidenced by the number of property transactions falling.’

As regards income tax, the statistics show that total receipts are up 5.42% on the previous 12 months, some 2.82% above inflation, with this figure being buoyed by a 22.03% increase from self-assessment income tax receipts in the same period.

Paul Haywood-Schiefer, assistant manager at Blick Rothenberg, said: ‘Although these are good results, the reality might be a little less spectacular.

‘In the summer of 2016 a significant number of individuals made their July tax payment late, resulting in over £1bn more collected in August 2016 than in August 2015. For the 2016/17 payments, it looks like individuals have been paying early with £888m more collected in June and July 2017 than was in the same months in the previous year.’

Haywood-Schiefer said it is clear that there have been increases in the amount paid through self-assessment over the last year, most likely down to individuals bringing forward dividend payments before April 2016 to take advantage of the old dividend regime before it changed. These resulted in higher tax liabilities in January 2017 and so higher payments on account in July 2017.

Corporate tax receipts continue on the rise with the 15.5% increase in the twelve months to June 2017, followed by a 16.97% increase in the same period of time to July 2017.

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