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Government rakes in an extra £5.3bn in stamp duty revenue

  • 22/02/2022
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Government rakes in an extra £5.3bn in stamp duty revenue
Between April 2021 and January 2022 the amount of stamp duty paid totalled £15.1bn.

Overall receipts for the period were £5.3bn more than seen the same period a year earlier, according to figures released by HMRC.

The figures show the amount of stamp duty paid rose, compared with the tax year 2020 to 2021 when there was a fall in property sales as well as market uncertainties which surrounding the Covid-19 pandemic and lockdown.

HMRC said high receipts in March 2021, were due to a  general uplift in economic confidence following the roll out of the vaccine and the announcement of the easing of lockdown.

Higher receipts in June and July, and then in September and October 2021 were explained by a higher numbers of transactions completed before the temporary reduced rates for stamp duty land tax on residential properties ended on the 30 June – this saw buyers pay zero tax rate on the first £500,000 of a property purchase and then on 30 September, zero tax rate on the first £250,000.

Higher receipts in December were explained by a cyclical surge in property completions as home buyers sought to complete their purchase before Christmas.

In January, the Treasury received £944m in stamp duty revenue, a 46 per cent decrease on December’s £1.7bn but 21 per cent higher than pre-pandemic levels in January 2020 where the total reached £777m.

Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “2021 was a record year for the Treasury, with the highest ever stamp duty receipts in a calendar year. And it’s no surprise that this tax revenue stream remains strong in 2022, particularly with house prices continuing to rise and demand staying strong amid the ‘race for space’ created by home owners’ changing requirements.

“After a record year in 2021, we expect stamp duty receipts will return to the long term trend of steady increases over time in the coming months. And, with average house prices still on the rise, the Treasury will continue to bring in billions, adding substantially to the cost of moving home.”


Inheritance tax

Inheritance tax (IHT) receipts between April 2021 and January 2022 were up on the same period the previous year by £0.7bn, at £5bn.

HMRC said higher receipts in October 2020, November 2020, and March to August 2021 were the result of higher volumes of wealth transfers during the Covid-19 pandemic, though HMRC said it could not verify this until full administrative data became available

Shaun Moore, tax and financial planning expert at Quilter said sustained property price growth and asset price inflation had pushed up the value of estates, meaning higher IHT receipts for the government.

“IHT was once viewed as a tax on wealthier individuals, but the reality is that the average UK property is only £50,288 short of the standard nil band rate (NRB). With the NRB and residence NRB frozen until 2026 and house prices still on the up, many more people could face a hefty IHT bill.

“The residence nil rate band was introduced in 2017/18 to account for rampant house price growth, but as a result we have an incredibly complex IHT system, which is poorly understood and therefore poorly planned for. In fact, the Office of Tax Simplification has said that the RNRB is one of the ‘most complex’ areas of IHT and even said that some solicitors choose not to advise clients on the RNRB because it is too complicated.”

“Perhaps now is time for a rethink of IHT to make the regime as easy to understand as possible for IHT payers. For example, combining the NRB and residence NRB would give someone an effective nil rate band of £500,000 in 2022/23. If instead the government left the nil rate band to increase in line with inflation from 2009/10, it would have been worth £428,000 in 2022/23.”

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