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Stamp duty drops as IHT receipts look set to break records ‒ HMRC

  • 22/08/2023
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Stamp duty drops as IHT receipts look set to break records ‒ HMRC
Stamp duty receipts have continued to drop significantly off the back of falling activity levels, though inheritance tax takings are rising to record levels, new figures from HM Revenue & Customs have revealed.

Overall stamp duty receipts for April to July dropped by £2bn to a total of £5bn. HMRC pointed out that this was largely down to lower takings from stamp duty land tax, which it stated was the result of the combination of “lower transaction numbers, the lower rate of taxation and a more generous relief for first-time buyers introduced in September 2022”.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said it was clear that the cost of living crisis had done much to cool the “red hot” property market, resulting in more “subdued” activity levels.

We will no doubt see further falls as the year goes on,” she added.

Coventry Building Society said that it was time for stamp duty reform targeted at supporting downsizers, noting that in July alone homebuyers shelled out more than £1bn on the tax.

Analysis from the mutual found that in the year to date homebuyers have paid more than £6.5bn on stamp duty, with an average bill of almost £10,000, and while there is support in place for first-time buyers there is no such incentive for downsizers.

Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said that the current system does more to deter downsizers than help them, which could result in swathes of people living in homes which are no longer right for them.

He continued: “The temporary thresholds are lightening the load for all homebuyers at the minute, but – like the Stamp Duty holiday before it – it’s short-term thinking which is only giving relief to buyers at a pinpointed moment in time. The long-term solution needs to come without a sell by date and aim to support buyers who need to move both up and down the ladder.”

Inheritance tax breaking records

The latest figures from HMRC showed that receipts from inheritance tax continue to rise. Total receipts from the levy for the April to July period hit £2.6bn, a rise of £0.2bn from the same period a year earlier, while June represented the biggest month for inheritance tax takings on record.

The Office for Budget Responsibility has forecast that inheritance tax receipts will be worth £7.1bn this year, and could raise as much as £8.4bn by 2027/28.

Stephen Lowe, group communications director at Just Group, noted that the growth seen in property prices in recent years have pushed greater numbers of estates into the inheritance tax thresholds. 

He continued: “These big numbers are good news for the Exchequer but a warning for the public, reminding them to assess the entire value of their estate including an up-to-date valuation of their property.

“Professional, regulated advice can also help people work out the total value of their estate, calculate how much tax they may be likely to owe and understand what options they have to manage that tax bill.”  

Daniel Tomassen, senior manager of the private client department at HW Fisher, added that it has now become more expensive for taxpayers to make a mistake or be late when making tax payments.

He explained: “Late payment interest rate has now hit 7.75 per cent, making it even more crucial for individuals to make sure they are fully clued up on how much tax they owe to HMRC, and to make their payments on time.”

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