Ahead of the Conservatives' manifesto being published next week, Prime Minister Rishi Sunak has pledged to axe stamp duty on homes up to £425,000 for first-time buyers, it has been reported.
Stamp duty land tax currently applies to sales over £250,000 but the plan would mean around 200,000 households would benefit from the change every year, The Telegraph has revealed.
The commitment builds on a proposal from former prime minister Liz Truss’s Growth Commission.
From March next year, the threshold figure for stamp duty will fall to £125,000.
Tips for first-time buyers
This is due to the end of a “temporary” relief period, so the levy will apply to cheaper and likely a greater number of purchases.
Chancellor Jeremy Hunt had previously said the Conservatives would not increase capital gains tax, stamp duty or the number of council tax bands, or “undertake an expensive council tax revaluation”.
During the BBC’s seven-party debate on Friday (June 7), House of Commons leader Penny Mordaunt announced that more tax cuts were coming in the Tory manifesto.
Ms Mordaunt said “this election must be about us cutting your taxes”.
Who pays stamp duty and what is it?
Stamp duty is a tax you might need to pay when you buy a property.
Currently, the stamp duty rates for non-first-time buyers in England (as reported by The Telegraph) are:
- 0% up to £250,000
- 5% on the next £675,000
- 10% on the next £575,000
- 12% above £1.5 million
First-time buyers do not pay stamp duty on the first £425,000 of the property’s value due to the “temporary” relief period.
The new proposed stamp duty policy follows from Liz Truss and Kwasi Kwarteng introducing temporary cuts in their mini-budget back in autumn 2022.
This was when the threshold property price for first-time buyers to avoid paying stamp duty was increased from £300,000 to £425,000.
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After that, stamp duty is levelled at 5% on the remaining house price up to £625,000.
But if the sale price is more than £625,000, there is no first-time buyer relief.
As detailed above, this stamp duty relief was only made temporary and is due to end in March 2025.
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