Furthermore, inheritance tax receipts rose 2.6% year-on-year to £8.5bn, a new record high.
Analysis of HMRC’s data by Coventry Building Society showed a 9.2% increase in stamp duty paid year-on-year, driven up by “out-of-date” thresholds set more than a decade ago that capture more homes in the tax net due to house price rises, according to the mutual.
The annual tax bill for stamp duty and tax on enveloped dwellings combined came to £20bn, £1.7bn higher than the year before.
Outdated thresholds
Coventry Building Society’s analysis of house price data revealed that when the £125,000 threshold was introduced in December 2014, the average house price in England was £191,523. Since then, house prices have risen by more than £98,000 to an average of £290,000, but the thresholds remain unchanged.
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The Office for Budget Responsibility’s (OBR’s) Economic and Fiscal Outlook shows property taxes – including stamp duty, devolved property taxes, and the Annual Tax on Enveloped Dwellings – are set to increase to an estimated £19.7bn this tax year and £28bn by 2030.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “Stamp duty is a big chunk of money on top of an already expensive process. With house prices rising so sharply over the past decade, out-of-date thresholds are pulling far more buyers into the tax net. Homes that once sat comfortably below the starting point are now being caught simply because prices have moved on.
“With inflation now at 3.3%, the cost of living remains a real pressure – many aspiring buyers are already juggling higher everyday expenses, making a hefty bill even harder to absorb. Covering the tax could mean people need to dig deeper into savings, lean on family for support, or compromise on the kind of home they want to buy. It makes it harder to take the next step, whether that’s upsizing, downsizing or moving when family circumstances change.”
Stinton is calling for a reform of the stamp duty system to avoid slowing down the housing market.
Relentless tax rises
Households are also feeling the squeeze from higher income, inheritance and capital gains tax bills.
HMRC collected £938.8bn in taxes in 2025 to 2026, an increase of 9.3% from the year before. Inheritance tax receipts hit a new record high of just under £8.5bn, a rise of 2.6% in a year.
Meanwhile, income tax is up from £302.8bn in the previous tax year to £330bn – an increase of 9% on the year, but rising by 49.6% since thresholds were frozen in April 2021.
Capital gains tax (CGT) has started rising again after two years of falls, up almost two-thirds (62%) in a year to £22.2bn.
Sarah Coles, head of personal finance at investment platform AJ Bell, said: “The taxman has carved himself a massive slice of households’ earnings, savings and investments over the past year, devouring a hefty portion of their wealth.
“Inheritance tax has been climbing relentlessly since 2022, which owes a great deal to the decision to freeze the nil rate bands. Rising house prices and investment values have automatically pushed more estates into paying this tax every year, and driven up bills for anyone caught by the net. If that’s not miserable enough, the inclusion of pensions in people’s estates from April 2027 is expected to drag 10,500 estates into the inheritance tax net that year, hike the amount of tax paid by 38,500 estates and increase the tax due by £34,000 each on average.”
