The stamp duty intake for home purchases rose by £40m annually to £848m in January, HMRC data showed.
However, this was significantly lower than the £1.5bn paid the month prior and, since April – the start of the tax year – £11.4bn has been collected in stamp duty.
This is higher than the £9.9bn intake for the period between April 2023 and January 2024.
Coventry Building Society said with five weeks until the stamp duty threshold falls from £250,000 to £125,000, the annual rise was likely due to a rush of activity as buyers aim to beat the tax change.
After April, the average stamp duty bill for a home in England will increase from £2,028 to £4,528.
The threshold for first-time buyer relief will fall from £420,000 to £300,000.
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Since the stamp duty threshold was raised in September 2022, more than £31.3bn has been paid to the Treasury.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “Buying a home is about to get a lot more expensive. Those already in the middle of the buying process will be racing against time to beat the deadline. Those who can’t get the keys to their new house in the next five weeks need to brace themselves for a hit [that] could amount to thousands of pounds.
“Failing to beat the deadline may mean buyers need to eat into their savings to afford the tax hike on their home, or arrange to borrow more on their mortgage to cover the cost. Some buyers may even attempt to renegotiate the selling price so the seller ends up taking the hit, and some potential buyers may be forced to hold off their purchases altogether.
“The pressure of the deadline will be felt by buyers across the market, with some having to make tough financial decisions in the weeks ahead. But the impact won’t stop on 1 April – higher costs may affect buyer behaviour for months to come. With buyers needing to factor in extra tax, we could see a shift in demand, slower sales, and a knock-on effect on house prices.”
IHT nears record intake
HMRC’s latest figures show that inheritance tax (IHT) receipts for the period from April 2024 to January 2025 are £7bn, up by £0.7bn compared to the same period last year.
HMRC said higher receipts from March 2022 are expected to be due to a combination of higher volumes of wealth transfers following recent IHT-liable deaths, and recent rises in asset values.
With the nil-rate band (£325,000) and residence nil-rate band (£175,000) frozen until 2030, more and more families are being dragged into paying the tax.
Rising house prices, particularly in the South East, and government plans to include pensions in the net for IHT from 2027 mean many more estates will be paying IHT in the future.
Shaun Moore, tax and financial planning expert at Quilter, said: “This relentless rise in inheritance tax receipts is baked into government policy. Farmers and business owners are also feeling the pressure.
“The upcoming reforms to Agricultural Property Relief and Business Relief could force more family farms and small enterprises into difficult decisions about their futures. A tax once aimed at the wealthiest estates is now creeping further into the middle class, and with unspent pensions set to be taxed from April 2027, the government’s IHT windfall is only set to grow.”
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, urged people to act now to try to reduce their IHT bill.
She said: “Gifts of any size fall out of your estate after seven years, so we can expect to see people start to gift assets to loved ones now so they can start the countdown ticking. We will also likely see people start to use the various gifting allowances available – such as the £3,000 annual exemption – to reduce the size of their estate.
“Gifting out of excess income will also prove popular. However, it’s really important that detailed records are kept, as gifts need to be proved to be made regularly and out of your surplus income to meet the rules. You also should not reduce your own standard of living to maintain these gifts – this is a really important point as you don’t want to be in a position of needing to ask for gifted money back because you can no longer afford to give it.”
Other HMRC figures show that capital gains tax (CGT) came in very slightly lower than a year earlier (3%), at £10.281bn. PAYE income tax and National Insurance receipts are £349.1bn, which is £10.3bn higher than the same period last year.
This article is based on one that was first published on Mortgage Solutions‘ sister site, YourMoney.com. Read: IHT receipts close to an all-time high of £7bn
