Stamp duty receipts have surged by nearly a quarter in the past year, fuelling concern that November’s Autumn Budget could trigger a fresh wave of property tax reforms and stall investment across the market.
HMRC data shows Stamp Duty Land Tax revenues rose 22% to £14.6bn in the year to the end of August, up from £12bn a year earlier. The sharp increase comes as speculation mounts that the chancellor, Rachel Reeves, is weighing up radical alternatives to stamp duty ahead of her first full Budget.
Among the ideas said to be under consideration are replacing stamp duty with a national property tax levied annually on homes worth more than £500,000, a so-called “mansion tax” by removing capital gains exemptions on the sale of high-value property, and even imposing National Insurance on rental income.
While still proposals, such measures have unsettled landlords and developers already grappling with higher costs and tighter yields, according to UK short-term lender.
Louis Alexander, chief executive of the property finance provider Somo, warned that any failure to cut or freeze existing stamp duty charges risked paralysing the market. “Landlords and investors are now contributing far more stamp duty than before. With another budget weeks away, there is a real uncertainty about what comes next for their increasingly eroding yields,” he said.
He added that bridging finance was becoming essential in keeping transactions moving as mainstream banks remain cautious. “Bridging finance may be what gives landlords and investors the flexibility to keep deals moving despite shifting tax rules,” Alexander said.
