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Stamp Duty: £4.6 Billion in Lost Tax Receipts & Business Revenue Since 2014

Updated: Aug 18, 2022

"In levying taxes and in shearing sheep it is well to stop when you get down to the skin." Austin O'Malley

When a property transaction is lost, it is not simply Stamp Duty (SDLT) that is sacrificed. The Government (and the Taxpayer) forgoes SDLT plus the VAT and Corporation Tax receipts from property-related activity associated with each transaction. The Economy also suffers as business revenue (the very source of taxation) is forfeited.

Ludgrove has analysed the reduction in London property transactions since the December 2014 Stamp Duty changes and estimated the impact on direct and indirect tax receipts (SDLT, VAT and Corporation Tax) as well as business revenue. The key findings are:

  • £4.6 billion (£72,406 per transaction) lost to the UK Economy in Taxes and Business Revenue.

  • £1.9 billion (£30,490 per transaction) lost in Tax Receipts (Stamp Duty, VAT on transaction activity and Corporation Tax receipts).

  • £2.7 billion (£41,916 per transaction) lost in Business Revenue associated with property transactions (legal fees, surveyor fees, moving fees etc).

  • For every £1 in lost tax revenue a further £1.37 has been lost in business revenue.

  • A 41% Fall in London Transactions since the period 1996-2007.

  • A 26% Fall in London Transactions since 2014.

  • Stamp Duty, not Brexit responsible for the Decline in Sales.

£4.6bn in taxes and business revenue losses since 2014
£4.6bn: The loss to The Exchequer and British Economy following the 2014 Stamp Duty Changes

A brief history of SDLT & London Transactions (1997-2018): 12 Stamp Duty revisions, a 1,400% Increase in the Top Rate and -41% Fewer Transactions.

In the last 21 years there have been 12 revisions to SDLT rates with the top rate rising from 1% in 1996 to 15% currently (a 1,400% increase). Over the same time London residential transactions have fallen significantly. In the 11 years to 2007 (when the highest rate was 4%) London transactions averaged 153,422 p/a. Today with the top rate at 15% transactions are -41% lower at a just 90,316, representing a loss of 63,106 transactions. 

London Property Transactions and Stamp Duty Rates 1996-2018

London Property Transactions are -26% below 2014: Looking specifically at the period since 2014, the top rate of SDLT was raised from 7% to 12% in December 2014 and then to 15% in April 2016 with the introduction of a 3% surcharge on second homes. Transactions since 2014 have fallen -26% and they are not far off the lows witnessed during The Financial Crisis. 

London Property Transactions and Stamp Duty Rates 2014-2018

Stamp Duty NOT Brexit is Responsible for the Reduction in Transactions

A common perception is that Brexit, rather than higher Stamp Duty rates is to blame for the significant decline in London transactions. Evidence proves this is simply not the case. In the chart below we compare London transactions to other "Brexit-Sensitive" areas such as Sunderland, home to Nissan Cars and Redcar home to Jaguar Land Rover (both companies have repeatedly warned about a no-deal Brexit and both have a high concentration of local employees). If Brexit were to blame we would expect transactions in these areas to have fallen to a similar extent as London. In fact the picture couldn't be more different. Since 2014 transactions in Sunderland are up +16%, in Redcar they are up +3% and England Ex-London transactions are up +10%. By comparison London transactions are down -26% and to take the most extreme example Kensington & Chelsea where the 2014 SDLT changes impacted the most, volumes are down a staggering -50%!

UK Property Transactions & Brexit
Property Transactions is "Brexit-Sensitive" Regions outside London have held up Strongly

£1.34 Billion in Lost SDLT Receipts from the Fall in London Transactions

Taking the cumulative lost London transactions each year since 2014 we find 63,495 transactions have been lost. At an average Stamp Duty of £21,150 the loss of these transactions is a sacrifice of £1.34 Billion in SDLT receipts to The Exchequer: 

Lost Stamp Duty Revenue

A Combined £4.6 billion Loss to the Exchequer and London Businesses

However it is not just SDLT receipts that are foregone with lost transactions. VAT and Corporation Tax receipts as well as business revenues suffer. In the table below Ludgrove has assessed typical transaction costs both from the perspective of the Vendor and the Buyer. These include estate agent fees, legals fees, surveyor fees, mortgage valuation fees and home removal costs as well as the average expenditure of a homeowner in the first year of ownership.  In total we estimate:

  •  £4.6bn (£72,406 per transaction) has been lost to the Treasury and The UK Economy as a consequence of the 2014 SDLT changes being:

  • £1.9bn in lost Tax Revenue (SDLT, VAT and Corporation Tax)

  • £2.7bn in lost Business Revenue.

Lastly and as if the picture was not grim enough, we calculate for every £1 in lost tax revenue a further £1.37 has been lost in Business Revenue. 

Lost business revenue, SDLT & Corporation TAX receipts from 2014 SDLT Reforms


It is quite clear that high-end property taxes over the years have failed to optimise direct and indirect property tax revenue (SDLT, VAT & Corporation Tax), economic activity (business revenue & employment) and failed to provide the necessary liquidity and fluidity required for a normally functioning market. Indeed in the last 4 years we have lost count of how many times buyers and sellers in London complain about the whole property chain being "gummed up" by the lack of movement at the top end. 

To many this will come as no surprise. In economics the Laffer Curve outlines the relationship between tax rates and tax revenue. The basic premise being that a 0% tax rate will raise £0 tax revenue and a 100% rate will also raise £0, the optimum tax rate quite  obviously lying somewhere in between! As far as property taxes are concerned, it seems quite clear that after 21 years of tinkering, the optimum top rate looks somewhere around 4-5%. At this level volumes in London have historically traded some +95% higher than today.

Proposed Solutions

We urge the Government to reduce SDLT to optimise the total tax take, encourage economic and housing activity.  We recommend either:

A) A 50% cut in SDLT rates across the board bringing the top rate towards 2007 levels where London volumes were +95% higher than today.


B) A smaller cut across the board (eg 35%) and splitting the tax 50/50 between the buyer and seller. Splitting the SDLT would reduce the Buyer's equity requirements as SDLT is financed 100% from equity.

To encourage home ownership over home investment we recommend keeping the 3% SDLT surcharge in place as well as the 0% SDLT rate for First Time Buyers.  

If you have any enquiries regarding this article, please contact Ludgrove Property.

Fraser Slater

Ludgrove Property

43 Berkeley Square


London W1J 5AP

Tel: 0207 889 2860



Disclaimer: Ludgrove Property Limited is not authorised or regulated by the Financial Conduct Authority (FCA) and we do not provide any financial or investment advice.  We recommend that any property investor seeks appropriate professional advice before entering into any contract, and we would also advise that the value of any investment can go down as well as up and that you might not get back what you put in. You may have difficulty selling a property investment at a reasonable price and in some circumstances it might be difficult to sell at any price. We would urge you not to invest unless you have carefully thought about whether you can afford it and whether it is right for you, and if necessary to consult with a professional advisor in accordance with the Financial Services and Markets Act 2000. All information is provided strictly as a guide only, is subject to change without prior notice and does not constitute an offer of investment. This website should not be regarded as an offer or solicitation to conduct investment business, as defined by the Financial Services and Markets Act 2000. Investors who are resident in or citizens of countries other than the United Kingdom may be subject to local restrictions. In particular, no offer or invitation is made to any US persons (being residents of the United States of America or partnerships or corporations organised under the laws of the United States of America or any state, territory or possession thereof), who are excluded from the services offered in this site. The information on this website has been obtained from sources which we believe to be reliable and accurate, but without further investigation this cannot be warranted.


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