Brits are being overcharged on their stamp duty at a time when many are struggling to pay their bills, claims a tax expert.
The UK Government has released their official Stamp Duty Land Tax (SDLT) statistics for the 2021/22 financial year, and payments for the levy – commonly charged on the purchase of a property – have soared by 63% compared to 2020 from £8bn to £14bn.
This spike came during a housing boom in Britain, with house prices soaring to record highs throughout 2022.
How stamp duty on homes hit over £10 billion
The biggest increases in stamp duty were seen in the residential sector, rising by 69% between financial year 2020 to 2021 and 2021 to 2022, from £6bn to £10bn.
Non-residential SDLT receipts are also on the rise too, increasing by 48% between financial year 2020 and 2022, from £2.6bn to nearly £4bn.
For many, stamp duty is an often overlooked or misunderstood topic, and according to research from stamp duty specialists Cornerstone Tax, 14% of Brits have been forced to take out short-term loans or emergency credit to cover the cost of unexpected stamp duty payments.
Why experts are now questioning whether Brits are being ripped off
The research found 13% of homebuyers say they feel that they were forced to pay too much stamp duty in error due to their solicitor.
David Hannah, group chairman at Cornerstone Tax said: "It comes as no surprise to see that stamp duty payments have soared over the past two years — this is indicative of the price and activity boom, which we saw in the housing market during this period.
“However, at a time when both residential and commercial property owners are seeing their budgets slashed due to the current economic climate, it's vital that people are not overpaying on stamp duty.
"It is often unfortunately an area that is overlooked or misunderstood – our data found a further 61% admitted they have never stopped to consider whether their payment was in fact correct.
“Commercial developers and smaller-scale landlords are also hugely important in the market currently in terms of providing stock amidst a severe shortage, so it's of the utmost importance they are not overpaying alongside prospective residential buyers."
How has stamp duty already changed?
Plans to cut stamp duty were announced as part of the Conservative mini-budget to aid economic growth by allowing more people to move home and provide first-time buyers with a better chance to get on the property ladder. These came into affect in September 2022 and was a permanent change.
As part of this, the stamp duty threshold, or the price at which buyers have to begin paying the levy, doubled from £125,000 to £250,000. A measure was also introduced that makes first-time buyers exempt from stamp duty on properties up to £425,000 and only having to pay 5% on the remaining value between £425,001 and £625,000. Overall, the steps taken mean that 200,000 people will be relieved of paying stamp duty altogether.
It followed a stamp duty holiday in 2021, which has now ended, to get the housing market in the UK moving again following the pandemic.
What changes to stamp duty have been proposed?
So far, the alternatives aren't without their drawbacks.
“Replacing a tax on buying, stamp duty, with one on selling, CGT, makes a lot of sense," says removal firm boss Anthony Thomas. "Buyers will already have profited from the increase in value of their home so paying a tax on that, rather than at the point of entry, seems much fairer.”
In May a survey revealed that 59% of respondents believe all first-time buyers should be exempt from stamp duty.
A Moving survey also found 38% think the levy on property purchases should be replaced by capital gains tax (CGT) on all home sales, while 58% of respondents want inheritance tax to be abolished.
Anthony Ward Thomas added: “First-time buyers are the lifeblood of the housing market and we need plenty of them to keep everything functioning smoothly further up the ladder.
“However, the cost of moving is in danger of running away from them – it’s not just about finding a deposit and having a big enough salary to get the mortgage you need, there are all the other moving costs, such as stamp duty.
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Sam is based in Coventry and has been a news reporter for nearly 20 years. His work has featured in the Mirror, The Sun, MailOnline, the Independent, and news outlets throughout the world. As a copywriter, he has written for clients as diverse as Saint-Gobain, Michelin, Halfords Autocentre, Great British Heating, and Irwin Industrial Tools. During the pandemic, he converted a van into a mini-camper and is currently planning to convert his shed into an office and Star Wars shrine.