Tax Office

Category: sdlt

Last week, the government released its updated HMRC receipts, showing a “bumper year” for the department.

HMRC receipts released

Government statistics issued last week show that HMRC tax are £80bn higher than they were before the pandemic.

£16.9bn of this came from stamp duty.

This record amount was paid between April 2021 and February 2022. It is an increase of £6.1bn on the previous tax year.

The previous record figure for stamp duty was in 2017, when the total stood at £16.4bn.

Helen Morrissey, a senior analyst at Hargreaves Lansdown, described 2001 as a “bumper year” for the department.

She commented that tax breaks, and the growing trend to find larger homes with more space, fuelled the increase in 2021 tax receipts.

“These factors kept the property market red hot until the end of the year,” Morrissey said. “However, whether the market can continue to maintain this momentum remains to be seen.”

Capital Gains for HMRC

Growth in tax returns was further increased, in part, by a 35% year on year surge in the UK’s capital gain tax bill.

The latest figure is up from £10.8bn, to a record £14.6bn in the past year.

Paul Haywood-Schiefer, a senior manager at tax and advisory firm Blick Rothenberg, said:

“Self-assessment income tax receipts collected in January and February 2022 [the normal month for collection and the following month which covered the extension granted by HMRC] saw a small reduction of just over £800 million from the same two months in 2021.”

“Whilst the self-assessment receipts have dipped, capital gains tax receipts are positively buoyant. Rules on paying tax on property transactions throughout the year mean that there is now a steady inflow each month. Total receipts are up nearly £5 billion (£4.8 bn) in the last 12 months.”

“There was much speculation following the Office of Tax Simplification’s suggestion for an alignment of capital gains tax rates to income tax rates, and this has led to additional trades with investors acting to bank gains before a tax rise that never came,”

You can use our tax calculator to see how much tax you owe on your income as a landlord each year.

Alternative to stamp duty

At least 18 MPs have supported a new annual Proportional Property Tax which would be levied on the current values of homes.

This new approach would replace council tax, which is currently based on 1991 valuations of properties, as well as replacing Stamp Duty Land Tax as well.

The campaign wants the PPT introduced at a flat rate of 0.48% of the property value.

Those in favour of the tax claim that such a move could lead to bills falling for 77% of the country, with the average household likely to be £556 a year better off.

However, this means there would be substantially increased bills for almost a quarter of households.

Looking at this proposal further, the tax would include a surcharge for second homeowners and foreign owners of UK property, gathering a further £4.5 billion.

It is clear that a proportion of those households with increased bills, would belong to landlords.

Council tax is usually the responsibility of those occupying the house, in this case tenants. If this new tax were to replace it, landlords may be in a worse position.

We will keep you updated on this potential new tax approach as it develops.