The Government is being urged to consider the “fiscal damage” of any further residential tax increases after analysis of the record Stamp Duty intake shows the impact on London transactions.
Property investment firm London Central Portfolio (LCP) warned that while Stamp Duty receipts hit record highs of £8.5bn in England and Wales during 2016, receipts in the capital were up just 1% while transactions fell 17% in the city.
Transactions liable to Stamp Duty under £250,000 fell by 25%, while those worth £250,000 to £1m dropped 13% and over £1m by 15%. London also saw Stamp Duty tax receipts fall 8% above £1m.
London may continue to make the largest contribution to Stamp Duty in the country, but its overall contribution has fallen from 14% to 10.7%, the research showed.
Naomi Heaton, chief executive of LCP, said: “The new Stamp Duty regime has clearly had a significant impact on London.
“With the Budget approaching, the Government needs to carefully consider the fiscal damage of any future residential tax increases.
“Whilst Stamp Duty take has been buoyed up in 2016-17 by the additional 3% charge, now representing 40.7% of all tax take in London, any new deterrent could tip the scales in the other direction.
“Despite political hyperbole, at 22% of all transactions London does not have disproportionately more ‘second’ properties liable to the charge than other parts of the UK.
“Reliance on this charge to prop up a market where transactions have fallen 17% year-on-year is a dangerous gamble.”