Saturday, June 10, 2023

The United Kingdom hits a record £12,000 million for its ITP thanks to luxury housing

Official data for the third quarter confirms record income for the British public treasury through stamp tax, the Spanish equivalent of property transfer tax (ITP), which is levied on house buying and selling operations. Between July and September, the agency HM Revenue and Customs collected almost 3,600 million pounds (4,122 million euros), a record amount for a single quarter. So far in 2022, collections are set to reach 12,000 million pounds (13,740 million euros), surpassing the 2017 figures.

Despite an environment of global economic uncertainty, particularly in the United Kingdom, high rates of inflation in Great Britain, and the ups and downs of domestic politics in recent times, the state’s revenue from taxes on real estate transactions reached an all-time high. is touching,

Rates for the third quarter of 2022, at exactly £3,590 million, were up 21% from the previous quarter’s high. This year has been characterized by high demand and peak house prices, which has allowed us to raise over £12,000 million in the nine months so far this year, a 28% increase on the previous annual record in 2017 before the pandemic. 9,470 million pounds.

However, analysts warn of an imminent fall in house prices due to the crisis and a low number of shutdowns of operations that could drag down tax collections.

Luxury housing, ‘guilty’ of a high collection

One of the main reasons for this increase in stamp tax revenue is luxury housing. According to Lucian Cook, director of research at real estate agency Savills, “the growth was fueled by very strong activity at the top end of the market.” And it is that in the third quarter alone, there was a 35% increase in purchases above one million pounds. % year on year.

Other types of purchases, such as hire purchase investments and second homes, are required to pay an additional three percentage points in the British ITP. In the previous quarter, it was around 530 million pounds (607 million euros).

Following the outbreak of the coronavirus pandemic, Boris Johnson’s government established an exemption from payment of this tax, the so-called ‘stamp duty holiday’, for the first £500,000 of any sale for England and Northern Ireland. From October 2021, the amount is reduced to the first £250,000, although first-time home buyers are exempted from paying the first £425,000, up from the earlier £300,000, a measure that the Exchequer will It was introduced by Chancellor Kwasi during his short tenure. Quarteng. And indeed, it has been one of the few measures that his successor Jeremy Hunt, now in Rishi Sunak’s new British government, has maintained.

Figures from HM Revenue & Customs do not break down revenue by price band for houses, but a Savills analyst estimates that around 40% of stamp duty collections in the third quarter came from purchases worth more than £1m. , although he barely even represented 5. % of total transactions.

“The disproportionate contribution of high-end purchases to tax revenue partly explains the government’s desire to retain exemptions. Cutting rates at the lower end is not too costly.”

However, the Treasury faces lower stamp duty collections in the coming months as higher mortgage costs limit buyer aspirations, house prices come under pressure and the number of transactions is expected to fall.

They confirm with Savills that house prices will fall by 10% and transactions by around 25% over the next year. For another analyst, Rory Scarisbrick, a partner at buying agency Property Vision, “the mood in the market has cooled quickly, although there was still evidence of demand, particularly in the luxury market.”

World Nation News Desk
World Nation News Desk
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