Greater London was the largest contributor towards stamp duty tax takes in 2017, at around 39%, with over £600m coming from two boroughs; Kensington and Chelsea and the City of Westminster.
The basic rate of stamp duty in 2017 across the UK was £7,161 on average, whilst buyers in London are paying almost four times that amount at £27,323, according to London Central Portfolio.
Last year residential stamp duty receipts increased by £1.3bn, rising to £9.5bn, according to figures recently published by HMRC. However, despite the record year for stamp duty tax take, one fifth of receipts were generated by the additional 3% tax paid on B2L properties and second homes. These properties generated £4.1bn of stamp duty receipts in total, 43% of the total tax take.
While UK residential transactions remain largely static, increasing by 1.1% in 2017, the firm reports that it is “clear” that the 3% additional rate stamp duty was the primary driver in increased revenue, calculating that, without this tax, receipts would be back at 2014 levels at around £7.5bn.
London Central Portfolio CEO Naomi Heaton commented: “Despite the continued rumble around whether the richest are paying their ‘fair share’, it is clear that they are the main contributor to stamp duty revenue. LCP’s findings indicate that the majority of the Exchequer's £9.5bn tax take is being generated by the 10% most expensive sales and that buyers in London are paying 4 times more Stamp Duty than the national average.
“The government also needs to be careful with any further policies targeting landlords. Contributing a huge amount towards the Exchequer’s tax take, landlords have been under increased public and government pressure over the last 5 years. New lettings listings are now down 5% to February, according to a recent Knight Frank report.
"Reliance on the stamp duty take from second properties, which pay an additional rate of 3%, to prop up the market is therefore a dangerous gamble. Representing almost half of all tax take, any new deterrent could start eating away at the public purse.
“Unless the Government can start to stimulate property transactions again, which according to Land Registry have fallen 29% in England and Wales over the last decade, the outlook for future stamp duty revenues looks fairly grim.”
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