Figures released by HMRC which show that stamp duty receipts fell by £1 billion last year support the findings of national audit, tax, advisory and risk firm, Crowe UK’s 2018 Property and Construction Outlook Report, which revealed Stamp Duty Land Tax (SDLT) is seen as the biggest tax barrier to business growth among property developers.
“The latest figures from HMRC concerning the ineffectiveness of stamp duty as a means to raise revenue for the government is not surprising. SDLT is continually seen by the industry as the biggest tax barrier to growth (82% of respondents to our report cited it as the main fiscal barrier they face); property developers in the UK are more heavily taxed when compared to many other OECD countries, so the lack of competitive advantage faced by UK developers seems to be playing out.
“High levels of SDLT impact significantly on the number of property transactions taking place, particularly at the top end of the market. The reduction in liquidity in the market ultimately reduces the receipts the government takes, meaning the tax is ultimately proving to be counterproductive.
“Elsewhere, the property market is facing other difficulties. Undoubtedly the uncertainty caused by Brexit is having an immediate knock-on effect, but structural inefficiencies in the taxation of the market remain. The government has a key role to play to get the property market moving again, from re-assessing the value of taxation applied to looking at restrictive planning policies, particularly in areas relating to the Green Belt protections.”