New data shows that landlords and second home buyers were responsible for paying nearly 50% of the total stamp duty collected last year.
A surcharge of 3% that has been in place since 2016 has contributed 43% of the revenue collected by the Treasury in 2017.
High value properties worth over £1 million also contributed heavily, generating £1.9 billion of stamp duty, despite only making up 2% of transactions.
£127 million in stamp duty was generated in 2017, consisting of 75 purchases of homes that were valued at more than £10 million. One flat in Kensington was sold for £90 million, generating tax of £10 million from a single sale.
The stamp duty regime has fluctuated significantly in the recent past, with the current arrangement for second homes or those purchased by a landlord being that under £125,000 there is no stamp duty to pay, while those paying over £1.5 million for the property can pay up to 15%.
In 2017, the amount of tax paid due to the purchase of residential property totalled £9.5 billion, which was an increase of £1.3 billion compared with 2016. The second home surcharge contributed £2 billion of this figure.
According to Naomi Heaton of London Central Portfolio, the government is in the midst of a "dangerous gamble" with it's current stance towards buy-to-let investors.
A typical property purchased as an investment of £500,000 would now cost the purchaser £30,000 due to the surcharge, up from £15,000 under the old regime.
The importance of second home buyers to the tax take is a reason for the government to be cautious according to Naomi Heaton:
“With landlords making up almost half of all tax take, any new deterrent could start eating away at the public purse.”
Landlords have also been hit by the new rules regarding mortgage interest, with only half of this now deductible. A fall in new buy-to-let purchases of 5% in January when compared with the previous year has been the result of these policies.
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Information is based on our current understanding of taxation legislation and regulations which is subject to change.
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