Stamp duty intake dropped to £2.4bn in April and Maywritten by Bella Palmer
HMRC data showed that the majority of this was because of a £900m drop in stamp duty receipts driven by lower transaction levels and a lower taxation rate
The tax intake for stamp duty and annual tax on enveloped dwellings (ATED) declined by £1.1bn to £2.4bn in April and May 2023.
HMRC data showed that the majority of this was because of a £900m drop in stamp duty receipts led by lower transaction levels and a lower taxation rate.
The stamp duty nil rate threshold was increased from £125,000 to £250,000 in September, meaning property transactions below this amount will not be liable for tax. This tax break will stay in place until March 2025.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said that after years of high levels, stamp taxes took a plunge –£1.1bn lower on the same period in 2023. More generous help will have played a role, but much of the decline is led by housing market crisis.
A toxic combination of the cost-of-living crisis and soaring mortgage rates has reduced demand in this once soaring market. With interest rates on the up and mortgage deals being withdrawn there is little possibility of a rebound in demand any time soon, Morrissey said.
Receipts for inheritance tax (IHT) over the same period was at £1.2bn, £100m higher on the same period a year ago.
Morrissey said that inheritance tax receipts continue to soar – £100m higher on this time in 2022 in a certain indication that frozen thresholds are continuing to draw more people into its net.
There are a number of ways people can reduce this tax – we have a £325,000 nil rate band, extra allowances when passing down the family home to close family members and a number of gifting allowances, but they have been no match for soaring home prices which have pushed many people’s properties into IHT zone. As many of these allowances and thresholds have been frozen for years may be now is the time to look at if they should be increased to give some relief to people, she said.
Rachael Griffin, tax and financial planning expert at Quilter, stated the recent figures revealed by the Chancellor should withstand reforming tax rules.
Earlier in June, former Chancellor and Tory MP Nadhim Zahawi said IHT should be removed and termed it “morally wrong”.
This resulted in a discourse as to whether the tax should be reformed instead.
Griffin further said that the 2022/23 IHT take hit a record-breaking £7.1bn, and if the tax take continues to increase at its current pace, we can expect these figures to hit new highs again.
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