While paralysing the top end of the housing market by leading to fewer transactions, stamp duty receipts have risen by a third in the three years since the system was changed.
New figures from HMRC showed that receipts have increased by 33pc since the then Chancellor George Osborne hiked stamp duty for homes that worth more than £925,000 in December 2014. This is equivalent to a boost of £2.14bn to the Treasury’s coffers.
While revenues in 2016 have increased by 18pc, transactions dropped by 8pc. This decrease in activity was prompted by the stamp duty hike making it too expensive for many people to move, as well as the uncertainty caused by Brexit.
This increase in revenues came from the money collected from those puchasing additional properties, who must pay 3pc more stamp duty after changes were made to the system in April 2016. These second home buyers and landlords contributed 39pc of receipts.
In central London, revenues have dropped by 1pc because of the stamp duty reforms paralysing the highest value parts of the housing market.
The reforms of Mr Osborne’s, from a ‘slab’ to a ‘slice’ system, increased stamp duty for homes worth more than £925,000, which means that there has been a big increase in money raised from these sales despite leading to a fall in transactions. Homes worth more than £1m composed just 1.7pc of transactions in 2016, but 30pc of stamp duty receipts.
Across London, revenue grew by just 1pc, but it was boosted by a 9pc increase in revenue from the outskirts of the capital.
Stamp duty collected in Kensington and Chelsea was more than that collected in the North East, Northern Ireland, and Yorkshire & Humberside put together, and 36pc of purchases there in 2016 were additional homes, raising the exchequer by £233m.
The average amount of stamp duty paid on each transaction in 2016 has risen by 27pc to £7,900. The chairman of estate agency Jackson-Stops, Nick Leeming, stated: “Prohibitive levels of stamp duty land tax have been a real drag on the UK property market over the last financial year.”
Leeming continued: “While the changes seen in December 2014 appeared to be good news for 98pc of home buyers at the time, the top end of the market has suffered and this, together with the additional 3pc tax surcharge, has had a knock-on effect on the rest of the market.”