Stamp duty hike raises double what taxman predicted

THE Government’s stamp duty changes are raising twice as much money from home buyers as initially expected, HMRC figures show. Analysis by Blick Rothenberg, the accountancy firm, shows that the Treasury has so far pocketed up to £2billion as a result of the three per cent “landlord tax”. Originally it had estimated that it would make £1billion a year from the policy in the four years between 2016 and 2020.

Under the policy, which was introduced in April 2016, anyone buying a second home or buy-to-let property must pay an extra three per cent in stamp duty on top of ordinary stamp duty. The figures suggest that the policy has not significantly deterred landlords and second-home owners from buying properties.

Robert Pullen, director at Blick Rothenberg, said: “The Government will need to urgently consider whether the additional three per cent stamp duty policy is helping achieve fairness in the property market, or if it is creating more problems than it is solving.”

“The policy intention was always stated to be to realign the residential property market to make it fairer for first-time buyers. It is becoming clearer, however, that as prices continue to rise, the measure has succeeded only in generating extra tax for HMRC as well as a sluggish property market evidenced by the number of property transactions falling.”

The Daily Telegraph is campaigning to remove stamp duty after a raft of evidence has shown it is affecting the economy and creating social problems by preventing families from moving. Last week Jacob Rees-mogg, the Conservative MP, told this newspaper that stamp duty must be cut “as a matter of urgency” as part of a return to Conservative values if the party is to win the next election.

To calculate the £2 billion figure Blick Rothenberg compared HMRC data from the year ending July 2017 to the year ending in the same month in 2015, during which time a virtually identical number of residential properties were bought. In the year to July 2017 it took £12.4billion in stamp duty, a £2 billion increase from the year ending July 2015 when it took £10.4 billion in stamp duty.

While some of the difference will have come from rising house prices, the majority of the increase is the result of the extra stamp duty charges, experts said.

In last year’s Autumn Statement the Treasury quietly raised its expectation of how much it would raise by 76 per cent to £6.9billion over the period, or £1.7billion a year.