Is HMRC in for a windfall after a surge in stamp duty receipts?

In the UK, there are two main types of stamp taxes. Stamp duty or stamp duty reserve tax may be payable on transactions involving UK shares and other securities, and stamp duty land tax (SDLT) may be payable on transactions involving property or land situated in England and Northern Ireland. Scotland and Wales have devolved property stamp taxes. The amount of tax payable is generally based on the consideration actually paid or deemed to have been paid on a transaction.

These taxes, which are paid by purchasers, are usually payable within a month. Sellers, on the other hand, are usually concerned with incurring tax on capital gains. Whilst stamp taxes are generally paid shortly after a transaction, capital gains tax (CGT) or corporation tax on capital gains may be payable up to 21 months after a gain is realised. For this reason, increasing stamp duty receipts may indicate an upcoming windfall in tax on gains. 

showed that stamp duty on shares receipts were up more than 36% in the 10 months ending January 2025, when compared to the previous year. For the same period, SDLT receipts increased by a little less than 15%. A corresponding increase to CGT receipts for the year, in line with the increase to stamp duty on shares, could equate to around an additional £5bn for the Treasury.

The increasing stamp taxes receipts appear to have primarily been driven by increased transaction activity leading up to last year’s Autumn Budget, as uncertainty over potential tax changes may have accelerated plans to dispose of assets. Given that the end of this tax year marks more key tax changes, including changes to business asset disposal relief and the abolition of the furnished holiday letting regime, we may see a further surge of transaction activity over the next month. Time will tell if these tax receipts represent a one-off increase or whether similar tax yields may continue in the future. 

Looking at SDLT, in isolation, we have seen significant changes in the current tax year, including the abolition of multiple dwellings relief and an increase to the higher rate for additional dwellings or ‘second home’ surcharge from 3% to 5%. However, further changes are on the horizon, with the temporary extension to the SDLT nil-rate band coming to an end on 31 March 2025, which will increase the SDLT cost of all purchases for consideration in excess of £125,000 by up to £2,500. First-time buyers are more significantly impacted by this change and may see an increase to SDLT on qualifying first-time purchases of up to £6,250. 

As falling borrowing costs may breathe extra life into the property market, HMRC may see a further boost to SDLT receipts.