The Treasury is facing a £1bn drop in stamp duty from property sales this year, which has sparked fears that the property market is becoming clogged at the top end, with buyers avoiding heavy tax bills that come with expensive homes.
Former Chancellor George Osborne increased stamp duty charges on high-end homes four years ago in a bid to boost the tax take, while also imposing a 3 per cent surcharge on second homes to discourage landlords.
Critics have argued that this makes it harder for those further down the ladder to move up, cutting the number of homes available to first-time buyers, and government bringing in less tax because people are more reluctant to move.
Official figures released yesterday revealed that, in this financial year, the Treasury has earned £6.5bn from stamp duty land tax, a drop on the £542m reported during the same period last year. If this trend is to continue, the government will have earned £12.5bn for the full year; a £1bn drop on the previous financial year.
Chancellor Philip Hammond has been faced with calls to cut the tax in this month’s budget, in order to increase activity in the property market and boost public finances at the same time.
Subscribe to our newsletter to receive breaking news by email.