Over the last decade political parties in the UK have promised to protect first-time buyers from rising stamp duty costs. They have made many promises to “hit the rich” but figures released this week suggest that stamp duty tax income is on the increase and is impacting everybody. So, what kind of figures are we talking about and who is paying?
Year to March 2015
Official government figures confirm that the UK authorities raised £7.7 billion from stamp duty tax across England and Wales in the year to March 2015. This is an increase of £1.5 billion on the corresponding period in 2014 and a significant increase on the £6.2 billion in the year to March 2008 – which was the peak of the UK property market.
This phenomenal rise in stamp duty income will surprise many people as will the fact that 66% of first-time buyers have been hit by this tax which is more than double the 32% figure for 1999. The situation for those moving home is even worse with the figure of 68% in 1999 having now increased to 85% for the year-ended March 2015.
Stamp duty reforms
Reforms introduced in December 2014 will help the majority of UK first-time buyers with a reduction in stamp duty outlay. The average stamp duty outlay for first-time buyers has fallen by around 26% which equates to a figure of £2500. While this is all good and well we need to bear in mind the fact that the cost of UK property continues to rise which will increase stamp duty payments for all parties concerned.
In what many would deem to be a situation of smoke and mirrors, the UK government looks as though it is helping first-time buyers on one hand yet increasing overall stamp duty intake as property prices rise. This comes at a time when UK property is much in demand despite the hangover for the worldwide economy from the 2008 collapse. Stamp duty tax is now becoming an integral part of the UK government’s budget and is likely to rise significantly in the longer term.
Areas hit hardest
This report on stamp duty income also shows that 9 out of 10 first-time buyers and home movers in the south of England are liable for stamp duty. It also shows the highest fiscal burden falling on those in the south-east and London who are paying four times the average UK stamp duty. Even though stamp duty is now seen as an additional tax to pay when moving property or buying your first house it does not add anything to the prospects for UK real estate.
Indeed, many experts would suggest that current and historic UK governments have literally milked the UK real estate market for their own ends. If you take a step back and look at the situation, what relevance does a stamp duty tax have on either buying your first property or moving home? Like so many taxes introduced by the authorities we are expected to sit back and take the hit!