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Taxman gains extra £2bn from stamp duty in last year

The taxman is having a bumper year thanks to stamp duty changes and a more ‘aggressive’ approach on inheritance tax.

The Government has racked up an extra £2billion in stamp duty revenues in the year ending 31 July 2017, which is being put down to a three per cent surcharge brought in on additional residential properties.

Stamp duty changes were announced by then Chancellor George Osborne in the 2015 Autumn Statement catching everybody by surprise. They came into force in April 2016.

Property tax: Stamp duty revenues are up £2bn in the year ending 31 July 2017

Buy-to-let investors and those looking to snap up a second home have seen their stamp duty tax bill rocket – and in many cases, more than triple.

Analysis of figures by accounting and tax firm Blick Rothenberg show that for the same number of property transactions as two years ago, the Government has racked up an extra £2billion in stamp duty

Latest statistics released by HMRC to 31 July 2017 show the number of property transactions was 1,204,730 and £12.4billion raked in via stamp duty.

Transactions levels were ever so slightly higher in the year to 31 July 2015 at 1,205,700, but there was a smaller revenue stream of £10.4billion from stamp duty.

Robert Pullen, director at Blick Rothenberg, says that some of the increase is down to general property price increases, but says it is likely that the majority relates to stamp duty changes.

For those snapping up a £275,000 buy-to-let or second home, the previous rate of stamp duty meant a £3,750 bill – but from April last year, it became £12,000.

Mr Pullen adds: ‘The policy intention was always stated to be to realign the residential property market to make it fairer for first time buyers.

‘It is becoming clearer, however, that as prices continue to rise the measure has succeeded only in generating extra tax for HMRC as well as a sluggish property market evidenced by the number of property transactions falling.

‘The Government will need to urgently consider whether the additional three per cent policy is helping achieve fairness in the property market, or if it is creating more problems than it is solving.’

Furthermore, a crackdown on inheritance tax has helped see the taxman’s receipts rise.

HMRC figures show total receipts were up six per cent annually to £11.2billion compared to the same time last year.

IHT receipts have also surged by more than 20 per cent in the first four months of the current tax year signalling a ‘more aggressive approach’ by HMRC.

The latest figures show almost £2billion was taken from people’s estates between April and July.

Sean McCann, chartered financial planner at NFU Mutual, commented: ‘It’s clear that the taxman is cracking down hard on IHT by looking more closely at people’s estates and challenging claims for reliefs.

‘When inheritance tax receipts rise, it’s usually because of a buoyant housing market. 

‘Now, with property prices stagnating, it’s difficult to see what could have caused such a sharp increase in receipts other than a more aggressive approach to IHT.

‘The extra scrutiny from tax officials means those who haven’t taken professional advice or planned early could be caught out. This could have a catastrophic effect on family wealth.

‘IHT is one of the more complex taxes and there are plenty of traps to fall foul of – as many families appear be finding out.’ 

For key tips on how to deal with IHT, read: How to avoid the inheritance tax maze