The Office for Budget Responsibility has warned that Treasury receipts from Stamp Duty Land Tax could be hit hard – possibly by around £10bn.
The OBR has identified Stamp Duty as one of five key areas of concern.
While it expects revenues from Stamp Duty to rise this year, to £13.1bn, it has warned that a 10% fall in the price of prime properties could hit Treasury receipts by 6.3%, while another financial crisis would hit Treasury earnings from SDLT the hardest of all revenue the Government earns from taxes.
The OBR said that 9,250 residential transactions in Westminster, Kensington & Chelsea accounted for only 0.8% of all sales in 2015-2016, but accounted for £1bn in SDLT – 14% of total receipts.
If prime property prices drop 10%, that revenue would fall over 6%, while a new financial crisis poses a huge risk: the OBR says it would mean total receipts would drop to around £3bn from 2018-2019 onwards.