Stamp Duty receipts decline as HMRC feels the weight of first-time buyer relief

Increased use of the first-time buyer Stamp Duty relief has seen HMRC report the lowest proportion of transactions that are liable for the property tax since the first three months of 2014.

The taxman’s third quarter data on Stamp Duty receipts shows that liable residential transactions increased by 16% between July and September 2018 to 189,000, making up two thirds of the total 279,500 sales that paid the tax over the three-month period.

However, this is down 25% annually and at the lowest level for more than four years, which HMRC blamed on increased use of the first-time buyer Stamp Duty relief as well as the devolution of the property tax in Wales to the Welsh Assembly.

The number of transactions for additional properties was up 7% over the quarter to 58,400, but down 11% on the same period last year.

The HMRC report shows that 58,800 first-time buyers claimed the relief in the third quarter of 2018, up 12% on the second quarter and taking the total amount of users of this exemption to 180,500.

The estimated total amount of the relief was £142m, a 14% increase on the second quarter.

This has left the taxman slightly out of pocket on an annual basis, with residential Stamp Duty receipts falling 10% to £2.3bn.

Almost half (44%) of this total came from additional properties at £1.02bn, although some of this may later be refunded to buyers yet to sell their main property.

There are more signs of life in the property market since this quarterly data was released.

Separate figures from HMRC for October show property transactions have returned to growth in most UK regions after a September lull.

The number of residential property transactions increased by 13.8% between September and October, up 4.1% annually to 111,950, HMRC says.

This took the number of UK transactions back above 100,000.

The biggest monthly boost came from Northern Ireland where sales were up 15.1% in October to 2,580, while England registered a 13.8% spike to 96,100 and Scotland had a 3.8% boost in activity.

Wales saw a decline by 9.6% to 4,020 on a monthly basis.

Annually, England led growth with a 5.5% boost, followed by 4% in Northern Ireland and 2.5% in Scotland, while the Welsh market was down 19.7%.

On a seasonally adjusted basis, transactions increased by 0.9% between September and last month, and 1.3% annually to 102,530.

Commenting on the data, Nick Leeming, chairman of Jackson-Stops, said: “Transaction volumes at this level remain consistent with previous quarters and have been relatively substantial.

“However, for what should be HMRC’s most fruitful quarter for tax receipts, we’re sure the Chancellor may be feeling that he’s missed a trick by failing to revisit second home Stamp Duty levels, with overall tax receipts lower than the third quarter of 2017.

“If Philip Hammond was to take steps to even marginally reform the impact of Stamp Duty in the second homes market, which has seen a drop in transactions of 11%, not only would Government see revenue from receipts increase but this would also help cool rental prices which have been steadily rising.”

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/756796/UK_Tables_Nov_2018__cir_.pdf

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/757796/Quarterly_SDLT_2018Q3_Main.pdf

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One Comment

  1. smile please

    Here’s a thought. Do away with the 3% surcharge for BTL.

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