The changes to stamp duty land tax (SDLT) system from a ‘slab’ to a ‘slice’ structure has resulted in a £657m fall in the amount of tax paid by the majority of homebuyers since the reforms, but purchasers of high valued properties over £1m are paying more in duty with a 16% hike in revenues, HMRC has calculated
While transaction levels for homes costing more than £1m remained constant, SDLT receipts in this category rose by 15% across the year, up from £2.14bn to £2.46bn.
At the top end of market, there was a 7% fall in transactions above the £2m mark, but SDLT receipts rose by 16%, increasing from £1.18bn to £1.38bn.
Under the old slab system, house buyers paid stamp duty at a single rate on the entire property price. With the new system, introduced at Autumn Statement 2014, the majority of buyers saw a reduction in the stamp duty payable as they only had to pay the rate of tax on the part of the property price within each tax band.
The SDLT bills for 780,000 homebuyers have been reduced by estimated £657m in the year since the tax was changed to create a more progressive system.
The figures, which are based on 'live' HMRC administrative data show that while the average property in London saw a decrease in SDLT, London as a whole paid more SDLT at £264m, due to the high number of properties which are worth over £1m in the capital.
The South East saw the largest saving on stamp duty paid although it had a relatively higher average property price, as large number of properties fall between £125,000 and £1m. Buyers in this region paid £234m less. The East of England saw a £161m fall in SDLT payments, while the South West saved £131m in tax.
The impact was less in other regions of the UK where property prices are lower. The North East, Wales and Northern Ireland saved less as they have fewer property transactions and many obuyers pay no or very little SDLT in the first place.
Almost 85% of residential property transactions are for the purchase of main residential home, HMRC’s 2014/15 data indicated.
Chancellor George Osborne said: ‘The overwhelming number of home-buyers – 98% – are saving money thanks to our reform, which has done away with the unfair old system that meant increases being imposed on those paying just a pound over the threshold.’
Osborne said the figures showed there had been ‘a fair, workable, lasting reform to the taxation of housing.’
He also cited analysis from the International Monetary Fund (IMF), stating that the impact of the SDLT reforms had ‘reduced distortions and is a step in the right direction’.
Essential reading
Significant changes to property taxes for second home owners selling or purchasing properties, and for buy-to-let landlords, are due to come into force in the new tax year 2016/17.
Read our extensive coverage and indepth analysis of the upcoming changes - Property taxes: buy-to-let buyers beware
