The UK’s HM Revenue and Customs (HMRC) recently reported a nearly 30% drop in stamp duty transactions in the first quarter of 2021. This is a significant decrease from the same period in 2020, when stamp duty transactions were at their highest level since records began.
Stamp duty is a tax charged on certain types of transactions, such as buying a house or transferring shares. It is usually paid by the buyer, but can also be paid by the seller in some cases. The amount of stamp duty payable depends on the value of the transaction and the type of transaction.
The HMRC report suggests that the drop in stamp duty transactions is likely due to the economic impact of the coronavirus pandemic. The pandemic has caused disruption to the housing market, with many potential buyers unable to secure mortgages or put down deposits due to job losses or reduced incomes. This has led to fewer people buying houses, and therefore fewer stamp duty transactions.
The drop in stamp duty transactions is also likely to have an impact on government revenue. Stamp duty is a major source of income for the government, so any reduction in transactions will have a negative effect on their finances. This could mean that other taxes may need to be increased in order to make up for the shortfall.
It is unclear how long the drop in stamp duty transactions will last, but it is likely to remain low until the economic situation improves. In the meantime, it is important for potential buyers to be aware of the potential impact of stamp duty on their finances. It is also important for the government to consider ways to stimulate the housing market and encourage more people to buy property, in order to help boost stamp duty transactions and government revenue.