By George! Osborne re-appears to defend his stamp duty reforms

The former Chancellor George Osborne - architect of drastic stamp duty reform - has come out fighting to defend the tax changes after years of keeping quiet.

His dramatic re-appearance in the stamp duty spotlight came in the form of a social media post over the weekend in which he stridently criticised a story in The Times reporting the reduction in income for the Treasury from stamp duty in 2017.

“The article completely fails to mention that the changes involved a reduction in stamp duty for over 95 per cent of families, and the removal of the slab system which the Office for Budget Responsibility correctly expected would cost revenue - ie, it was a tax cut” tweeted Osborne, who since resigning as an MP has become editor of the Evening Standard in London.

Osborne’s return to the fray over stamp duty follows figures - reported by Estate Agent Today and in most industry and mainstream media outlets - that the current Conservative government is collecting less stamp duty revenue overall than before the changes were introduced by Osborne in December 2014. 

Some £1.987 billion was raised from stamp duty the second quarter of this year from receipts in England and Wales: as recently as the the third quarter of 2015 - that is, six months before the introduction of the three per cent stamp duty surcharge for additional homes - revenue from SDLT was £1.999 billion.

The Times on Saturday reported the story using the terms “George Osborne’s tax increases for the wealthiest home buyers backfired” and “the government is collecting less stamp duty overall than before the changes were introduced by Mr Osborne.”

Last week an analysis of HMRC stamp duty statistics for the second quarter of this year by property advisers London Central Portfolio suggested that receipts for the April/May/June 2018 period were down 13.8 per cent, or £317m, from the same period of 2017.

However, Osborne’s tweet suggests this was the plan all along.

As most agents will know, until Osborne’s surprise announcement in a Budget on December 2 2014, HM Revenue & Customs used a ‘slab’ system - if a home fell into a particular stamp duty band the entire cost of it was taxed at the related rate. 

This created big jumps in duty when a buyer crossed a threshold. For instance, a home costing £249,000 attracted duty of £2,490 while one costing £250,001 attracted more than £7,500 in duty. Agents had long argued that they wanted this ended.

At the time of Osborne’s 2014 announcement, the change meant that anyone buying a house costing less than £937,000 - about 98 per cent of buyers according to house purchase patterns at that time - would pay less duty; anyone buying a more expensive home would pay more.