25th
May 2016
April produced record revenues as second home buyers and landlords rushed through residential property purchases to avoid the ‘hated’ April 1st increase of stamp duty. The HMRC data highlighted that in March 173,430 property purchases were rushed through doubling February’s figure.
It is no wonder that April’s sales plummeted because of the ‘stampede’ prior to the hike, with just over 100,000 less than March’s record level of residential property purchases. Such a low number of sales have not been seen since February 2013.
A partner of an accountancy firm Nimesh Shah, said: “It was inevitable that April would be a bumper month for stamp duty revenue as buy-to-let investors scrambled to beat the surcharge.
“Changes in the tax system lead to behavioural change, and the advance warning by the Government that stamp duty would increase for second purchases from 1 April is certainly evidence of opportunistic buyers wanting to beat the tax rise.”
There is a 3% increase in stamp duty, since April 1st, for any residential properties above £40,000 e.g. a £275,000 home would have, prior to the increase would have cost £3,750 in stamp duty, but now it will be a whopping £12,000.
The ONS (Office for National Statistics) states that the rush to buy before the increase had driven up house prices by 2.5% in March from the previous month. In London prices went up daily by £1,000 in March and overall in the month by approximately £30,000.
The CML (Council of Mortgage Lenders) figures of buy-to-let purchases were up by an incredible 290% for March compared to the same month of last year.
The accountancy firm claims that the governments receipts of £11 billion, collected over the twelve months in stamp duty, was nearly as much as the combined total of capital gains tax and inheritance tax.
Nimesh Ash, comments: “Despite the change in the way stamp duty was calculated in December 2014, which meant that most property purchases (those below £937,500) would result in less tax, the tax revenue is now £400million up on the previous 12 months.
“The Treasury predicted the new system would cost them £760million in 2015/16, but the announcement of the additional three per cent surcharge has dramatically reversed that projection in the Government's favour.”
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