Stamp duty surcharge receipts now dominate Treasury income in over half of English local authorities, with Paragon Bank data revealing 164 councils generated more than half their stamp duty from additional-property charges in 2024-25. This marks a sharp rise from 62 authorities in 2016-17, reflecting the surcharge’s growing role as a fiscal pillar. The 5% higher-rate additional dwelling surcharge (HRAD), raised from 3% in 2024, now accounts for 56% of England’s total stamp duty revenue, up from 22% when introduced.

Northern England bears the brunt: Yorkshire and the Humber and north-east England see surcharge receipts comprise 92-93% of local stamp duty income. Analysts attribute this to urban buy-to-let demand, where lower-value homes offer better rental yields. The surge isn’t driven by new investment waves but by landlords restructuring portfolios via limited company ownership, which still triggers the surcharge despite no property transfers. Hamptons’ Aneisha Beveridge notes this shift highlights the tax system’s reliance on a narrow buyer base, risking revenue declines if incorporation trends stall.

Stamp duty totals jumped 21% to £10.4bn in 2024-25, with surcharge receipts hitting £5.4bn—a 19% rise partly due to the rate hike. Overseas buyers contributed 5% of surcharge revenue, with sharper dual charges (5% + 2%) on ultra-luxury homes. Experts warn the surcharge’s dominance may soon face headwinds as incorporation incentives wane, potentially destabilizing this critical revenue stream.

The data underscores a tax landscape where buy-to-let and second-home transactions now underpin half of England’s stamp duty intake, reshaping property investment strategies and long-term housing market dynamics.