Figures from HMRC showed that the tax paid against housing sales in May was slightly down on the £1.3bn collected in April.
So far this year, £5.4bn has been paid in stamp duty, slightly down on £5.5bn over the same period last year.
Homebuyers paying more tax due to frozen thresholds
Analysis from Coventry Building Society showed that the stamp duty threshold remaining the same since 2006 left buyers paying a higher tax bill.
It said that house prices in England had risen by 84% in the last 20 years, but the £125,000 nil-rate band had not moved. In 2006, the average house price was just £34,000 higher than the nil-rate threshold, but currently, the difference is £166,000.
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As a result, the stamp duty paid on an averagely priced home has risen from £340 in 2006 to £4,570 today.
Earlier this month, the Housing Committee published recommendations for the government to make homeownership more affordable, proposing that a consultation exploring alternatives to stamp duty be published by the end of the year.
MPs said the tax “reduces the affordability of homeownership, slows the property market, and ultimately damages the economy”.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said it was worth questioning whether a threshold designed for the 2006 housing market still made sense 20 years later.
He added: “When the current stamp duty thresholds were introduced, Tony Blair was Prime Minister, the first iPhone hadn’t been released, and the average home in England cost £159,000. Today, the average price is a lot different – but the starting point for the tax hasn’t moved.
“It’s not surprising that buyers are paying much larger tax bills when the threshold has been standing still while house prices have risen all around it. In some parts of the country, buyers who wouldn’t have paid a penny in stamp duty when the thresholds were introduced are now facing bills worth thousands of pounds.”
Stinton said recent stamp duty holidays showed that the government was aware of the need to temporarily adjust thresholds to stimulate the market, “but the underlying structure of the tax has barely changed”.
“The housing market today looks very different to 20 years ago, and with people facing increasingly large tax bills, some serious thought should be given to how property taxes can be made fit for 2026 and beyond,” he added.
Lower inheritance tax intake
Some £1.4bn was collected in inheritance tax (IHT) in May, a fall of £37m year-on-year.
Will Hale, CEO of Key Equity Release, said that despite this decline, IHT receipts for this year were still on course to reach £14.5bn by the 2030/31 tax year, compared to £8.5bn last year.
Hale said because of this, “never has quality advice been more important”.
He added: “With over £3.8trn of unencumbered housing equity sitting with the over-65s, property wealth must play a major role in all planning strategies.
“Advisers who are not qualified in or do not want to advise on later life lending can set up referral partnerships with trusted specialists to ensure clients have access to products such as modern lifetime mortgages, which can be used to facilitate gifts to family members, supplement retirement income or to fund capital purchases.”
