Many have wondered why the Government has ignored calls for Stamp Duty Land Tax reform, but new economic forecasts out yesterday may provide some answers.
Economists have increased their forecasts for the Government’s tax take from Stamp Duty over the next year.
The Office for Budget Responsibility (OBR), which is independently run but used by the Treasury for its official economic data, has revised its Stamp Duty predictions, made last November, for 2016-2017 by £0.3bn to £11.6bn.
The economists now predict Stamp Duty receipts on property will reach £17bn by the 2021-2022 tax year, up from £16.8bn predicted previously.
For the 2016-17 tax year, the OBR expects £6.9bn of receipts to come from residential property and £1.4bn from the additional property surcharge, and predicts this will increase to £11.1bn and £2bn respectively by the year 2021-22.
|Stamp Duty Land Tax: Receipts by sector|
|SDLT from residential property||7.3||8.3||9.8||10.5||11.3||12.2||13.1|
|main market rates||6.9||8.1||8.7||9.4||10.2||11.1|
|additional properties 3 per cent surcharge1||1.4||1.7||1.8||1.8||1.9||2.0|
|SDLT from non-residential property||3.4||3.1||3.1||3.3||3.4||3.5||3.7|
|Annual tax on enveloped dwellings (ATED)||0.2||0.2||0.2||0.2||0.2||0.2||0.2|
|1 Additional properties revenue is net of refunds which can be claimed up to 36 months after initial payment.|
A report from the OBR said: “Residential transactions and prices have been a little stronger than expected in recent months, but transactions are expected to fall year-on-year in 2016-17 as a whole, partly because of the effect of forestalling in advance of the additional properties surcharge.
“Transactions at the top of the market have fallen the most (but have also recovered somewhat since our November forecast). These make up an increasing share of receipts across the forecast period due to fiscal drag from fixed thresholds and continued growth in prices.
“Receipts from the 3% surcharge on additional properties (i.e. buy-to-let investments and second homes) that came into effect last April have been revised up in the short term as outturn receipts continue to be higher than expected.
“They have accounted for around a quarter of receipts from residential property in recent months. This rise does not feed through to later years as some of the recent strength appears to reflect the seasonal pattern of the market, which had not been fully factored into the forecast.
“There is continued uncertainty over the proportion of receipts that will ultimately be refunded – individuals have 36 months to make a claim, so we will not have full outturns for some time.
“We have retained our November assumption that 15% will be refunded in steady-state, but will keep this under review as more data become available.”