Fall in corporate wrapper property purchases will hit overall tax take – LCP

The figures showed a 52% drop in transactions and 58% drop in stamp duty receipts, from property purchases in corporate wrappers and the company said government is “throttling” the residential market.

Overall residential stamp duty receipts increased 17% to £8.59bn in England and Wales due to the introduction of the 3% surcharge on purchases of second properties.

However, transactions fell by 8% in England and Wales, with London experiencing the worst transaction drop  at 17%.

Falling revenues

Buyers have been liable to a 15% stamp duty charge, alongside paying the Annual Tax on Enveloped Dwellings (ATED) of up to £218,000 per year.

With £178m of ATED collected by the government in 2015-16, LCP said the 2016-17 decrease in corporate purchases could mean a big tax reduction that is not included in HMRC’s stamp duty statistics.

“It is clear that the 15% stamp duty charge, coupled with the penal ATED, has dis-incentivised new corporate purchases,” said LCP chief executive Naomi Heaton.

“Whilst the falling numbers of properties acquired in corporate wrappers is good news for the government, who has sought to deter such purchases, it is likely that the falling stamp duty revenues reported will be accompanied by a reduced level of tax collected from ATED when the results are published in January,” she added.

“This will be another black hole for the government to fill, whose options are diminishing as the residential market gets throttled.”

In total across England, Wales and Northern Ireland there were 211,000 additional property transactions in 2016-17. £3.36bn of SDLT was paid on additional property transactions, accounting for 39% of residential SDLT receipts.

The average value of these transactions was £276,000, paying an average £16,000 SDLT with 97% bought in England.