01 Oct 2014
HMRC collected some £12.4 billion in stamp duty in the 2013/14 tax year, a 35% rise on the previous year and the largest taking since 2007, before the financial crisis.
A rise in house prices was the main driver of the increase, with three-quarters of the taxes coming from property transactions and the rest paid by savers and traders when buying shares.
With house prices rising fastest in London and the south east, those regions alone accounted for £4.6 billion, some two-thirds of the total residential stamp duty tax paid in England for the whole year.
David Hollingworth of mortgage brokerage London & Country, said: “There has been a huge upsurge in activity in London and the south over the past 12 months … and these stamp duty takings underline that. They will provoke controversy, though, because of the way the tax is charged, effectively as soon as you trip over a certain band the higher rate is charged on the whole purchase price. That seems unfair and it is no surprise there are calls for reform.”
Stamp duty is charged at 1% on all properties that sell for more than £125,000 and 3% on the entire amount if sold for £250,001 and above. It rises to 4% above £500,000, 5% if between £1 million and £2 million, and 7% above that
A study by estate agents Haart suggests the average house price will reach the 3% threshold by 2016. Paula Higgins, chief executive of the HomeOwners Alliance, said: “These latest figures show just how wrong stamp duty is. It was a tax introduced to apply to the few but is now a tax on families and first-time buyers buying homes to live in as they have to save thousands to pay this upfront tax.”