UK Chancellor Jeremy Hunt says the stamp duty tax cut announced in September’s “mini-budget” will be reversed in 2025.
The tax cut on home purchases were part of a package of tax cuts announced by the government of Prime Minister Rishi Sunak’s predecessor, Liz Truss, and her chancellor, Kwasi Kwarteng. The cuts, which were one of only a few fiscal policies that remained in place after Hunt’s appointment, will now end on March 31, 2025.
Hunt told lawmakers in Thursday’s budget statement that he will “sunset” the stamp duty measure once it ends, “creating an incentive to support the housing market and all the jobs associated with it by boosting transactions during the period the economy most needs it,” he said.
When the removal of stamp duty on property transactions was announced in September, no plan for a complete removal of the tax cut was included. Rocketing prices have put home ownership out of reach for millions of Britons, as pandemic era stimulus accelerated demand and caused values to jump. The changes were meant to help first-time buyers.
Under the current plan, homebuyers don’t pay stamp duty on the first 250,000 pounds ($295,360) of the property sale price, double the earlier threshold. The threshold is 425,000 pounds for first-time buyers, an increase from 300,000 pounds, and that relief can be claimed for properties costing up to 625,000 pounds.
“The reversal will make it increasingly difficult for prospective first-time buyers to get on the housing ladder in the coming years, particularly in London and the South East which accounts for the majority of tax duty receipts,” said Richard Donnell, executive director at property portal Zoopla.
Hunt also said the tax exempt allowance for capital gains tax will be more than halved to 6,000 pounds next year and cut again to 3,000 pounds from April 2024. That’s a blow for buy-to-let landlords, who have to pay capital gains on properties that sell for more than the amount they paid for them.
For renters in social housing, Hunt offered some respite. He committed to capping the increase in social rents at a maximum of 7 per cent in 2023-2024. That’s a saving of 200 pounds next year for the four million families living in the social sector who are most exposed to high inflation, he said.