The latest financial figures reveal a notable decrease in overall tax receipts, with a £4.1 billion shortfall compared to the previous year, totalling £12.7 billion from April 2023 to January 2024.
This downturn primarily reflects the evolving landscape of the UK property market, influenced by various factors including the COVID-19 pandemic and changes in Stamp Duty Land Tax (SDLT) rates.
The year 2020 to 2021 witnessed a significant drop in property sales, largely attributed to the market uncertainties triggered by the COVID-19 pandemic. Additionally, the government’s introduction of temporary reduced SDLT rates for residential properties further impacted receipts during this period.
Notably, tax receipts experienced spikes in June and July 2021, followed by another increase in September and October 2021. These surges were directly linked to the conclusion of the SDLT holiday, with many transactions rushing to completion before the zero tax rate on the first £500,000 ended on 30 June and the subsequent zero tax rate on the first £250,000 concluded on 30 September.
Comparing the period of April to September 2022 with the same timeframe in the previous year, there was a noticeable increase in tax receipts. This rise can be partially attributed to the end of the SDLT residential holiday in September 2021, which had offered lower tax rates during 2021 to 2022.
The effects of the introduction of lower stamp duty rates from 23 September 2022 began to reflect in the tax receipts from October 2022 onwards. This policy adjustment aimed to stimulate the property market by making home purchases more affordable, thereby influencing the pattern of tax receipts observed in the subsequent months.
