Data from HMRC showed that the majority of this was due to a £900m decline in stamp duty receipts driven by lower transaction levels and a lower rate of taxation.
The stamp duty nil rate threshold was raised from £125,000 to £250,000 in September, meaning property transactions under this amount will not be liable to pay the tax. This tax break will remain in place until March 2025.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “After years of flying high, stamp taxes took a dive – down £1.1bn on the same period last year. More generous relief will have played a part, but much of the fall is driven by housing market woes.
“A toxic mix of the cost-of-living crisis and surging mortgage rates has dampened demand in this once surging market. With interest rates on the rise and mortgage deals being taken off the table there’s little chance of seeing a bounce back in demand any time soon.”
Inheritance tax intake rises
Receipts for inheritance tax (IHT) over the same period came to £1.2bn, a £100m uptick on the same period a year earlier.
Morrissey added: “Inheritance tax receipts continue to surge – up £100m on this time last year in a sure-fire sign that frozen thresholds are continuing to drag more people into its net.
“There are plenty of ways people can mitigate this tax – we have a £325,000 nil rate band, extra allowances when it comes to passing down the family home to close family members as well as a series of gifting allowances, but they have been no match for surging house prices which have pushed many people’s estates into IHT territory. Given many of these allowances and thresholds have been frozen for years perhaps now is the time to look at whether they should be raised to give people some relief.”
Rachael Griffin, tax and financial planning expert at Quilter, said the recent figures demonstrated by the Chancellor should resist reforming tax rules.
Earlier this month, former Chancellor and Tory MP Nadhim Zahawi said IHT should be scrapped and described it as “morally wrong”.
This led to a debate as to whether the tax should be reformed instead.
Griffin added: “The 2022/23 IHT take reached a record-breaking £7.1bn, and if the tax take continues to grow at its current pace, we can expect these figures to reach new highs again.
“While IHT is not the government’s most lucrative tax, it has increased significantly in recent years as frozen thresholds and higher house prices led to more people being caught by in its net. Abolishing it altogether would punch a hole in the budget, compounding an already bleak economic outlook.”
