Maintaining the current Stamp Duty Land Tax holiday threshold could provide millions for the Treasury

An extension of the Stamp Duty Land Tax (SDLT) threshold after 31st March 2021, rather than returning to the £125,000 threshold, could generate higher consumption. This has the potential of increasing housing market activity, which subsequently could provide a fiscal surplus of £139 million per year.

Research suggests that maintaining the current SDLT holiday threshold of £500,000 (increased from £125,000 under the SDLT holiday until 31st March 2021) would provide new tax revenues of between £2.3 and £4.1 billion. However, increasing the threshold on a permanent basis to a lower amount of £450,000 from 31st March 2021, could see the net increase in tax revenues rise to £247 million, whilst a threshold of £300,000 could lead to a surplus of £491 million per year.

A new SDLT threshold could lead to an estimated 37,000 additional property sales each year, resulting in £266 million in annual revenues. Future property values could rise, which combined with increased transaction numbers, could generate £523 million in annual revenues. The increase in house prices would lead to an increase in household’s collective net wealth up to £113 billion, driving household consumption up by an estimated 0.36% – 0.75%.

According to HMRC, the value of property transactions where the seller was liable to pay Capital Gains Tax was £26.6 billion between 2017/18. Aggregate property wealth increased by 1.9% which could indicate that property transactions, which are liable to Capital Gains Tax, could rise by approximately £505 million each year.

The full report can be found here.


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Emily Dodds

Emily Dodds

Marketing and Business Development Officer

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