By Neil Driver
According to new data, HM Revenue & Customs has seen an increase in the tax it collects from property in the last 12 months due to rising property prices.
Analysis of HMRC’s own provisional figures show that from April 2021 to March 2022 total tax receipts for the period rose by 22.9 per cent from £133,8 billion to £718.2 billion.
Of this tax rise, Stamp Duty Land Tax receipts rose from £6.1 billion to £18.6 billion – an all-time high. Inheritance Tax (IHT) receipts for the same period were £6.1 billion, which was £0.7 billion higher than in the same period a year earlier.
Several experts have pointed out that this increase in IHT is most likely due to rising house prices, particularly in the South East.
Unfortunately, more and more households are likely to be drawn into paying IHT due to the current freeze on the stand and residence nil rate bands, which combined give a deceased couple a tax-free allowance of up to £1 million when passing a main residence to a direct descendant.
Equally, those looking to sell investment properties, or second homes may face higher Capital Gains tax bills, as the capital gains tax allowance also remains frozen at £12,300 until 2026.
As a result, taxpayers face paying additional tax as property prices continue to rise, with UK average house prices already increasing by 10.9 per cent over the year to February 2022, according to the latest data from the Official for National Statistics.
In fact, with the average UK house price hitting £277,000 in February 2022 it is now £27,000 higher than it was at the same time last year.
If you are concerned that rising house prices could land you with a higher tax bill in future, please contact us.