Decline in high value sales impacting Stamp Duty revenue

Some £8.4 billion was collected by the Treasury over the course of the year, down from £9.3bn at the same point of 2018.

Part of the annual decline can be attributed to the devolution of SDLT to Wales which took place in April last year. However, even if the £155.5bn collected through Wales’ Land Transaction Tax since its introduction is added back in, annual receipts are still 8% lower.

Reliefs for first-time buyers were also introduced in November 2017, with HMRC estimating that a total of £680m has been relieved since its introduction, of which £521m was in the last 12 months.

A fall in the number of high value transactions, which are charged at higher rates of stamp duty, is now starting to have a more notable impact on revenue. HMRC figures show that in the 12 months through to the end of Q1 2019 the number of sales with a value of £1m and above fell 9.7% year-on-year from 19,300 in 2017/18 to 17,600 in 2018/19. In the first three months of 2019 alone, high value sales fell 19% compared with 2018, as uncertainty surrounding Brexit peaked.

Oliver Knight, Associate, Knight Frank Residential Research, said: “Higher rates of stamp duty at the top end of the market, combined with a sharp rise in political uncertainty since the turn of the year, led to a moderation in activity now being reflected in stamp duty receipts.

There are indications of increased of pent-up demand in the market however, and we may see a more activity given the Brexit extension – Treasury policymakers will be hoping this may help plug the receipts gap.”

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