Stamp duty cut in ‘massive’ Budget
Chancellor’s bid to free up homes market in swathe of tax changes to breathe life into economy
THE Chancellor will announce a string of tax cuts tomorrow to drive economic growth – including a reduction in stamp duty.
Kwasi Kwarteng is expected to use his fiscal statement to encourage investment and boost businesses. The statement had been billed as a ‘mini Budget’, but sources said last night: ‘This is not a mini Budget – it’s massive.’
Mr Kwarteng will confirm plans to reverse the recent national insurance hike and scrap a planned rise in corporation tax.
And he is reportedly planning to cut stamp duty – which currently brings in around £12 billion a year for the Treasury – to get more people moving house and driving the economy upwards.
The Chancellor and the Prime Minister
‘It is one of the most damaging taxes’
have been working on the plans for more than a month, according to The Times.
Liz Truss believes cutting stamp duty – paid when buying a property worth more than £125,000 – would drive economic growth by encouraging more people to move home, as well as helping first-time buyers on to the property ladder.
Sources said there will be further tax cuts unveiled tomorrow as well as reforms to reduce the burden of regulations on companies.
Miss Truss told business chiefs in New York that she wants ‘ lower, simpler taxes in the UK to incentivise investment, to get more businesses going in the UK’. She said: ‘I want to make sure that we have a strong economy, a growing economy, a dynamic economy, that we are a country that is pro-business, pro-attracting investment into our economy and also focused on long-term economic security.
‘We do, following Covid, have a significant number of people that are economically inactive. We want to encourage more of them to go into work with a tight labour market, get the right skills, as well as being a country that attracts economic investment.
‘So we won’t be raising corporation tax, as was planned. We’ll be reversing the national insurance rises which took place earlier this year. And the Chancellor will be announcing various other simplification measures.’
Government sources declined to give details of the stamp duty proposals, but they were backed in principle by economists.
Stuart Adam, of the Institute for Fiscal Studies, said: ‘In terms of economic efficiency and making the housing market and the economy work better, then stamp duty is one of the most damaging taxes and cutting it is a very good thing from that point of view. Whether you like the distributional effects of it is more of a political value judgment as this would be a giveaway to well-off homeowners – particularly if we’re talking about cutting the top rates of stamp duty to very well-off big homeowners.’
He said the Government could combine a stamp duty cut with a reform of council tax, which would help lower-income homeowners.
Under the current system, no stamp duty is paid below £125,000 – and for first-time buyers the threshold is £300,000. Buyers then pay stamp duty at 2 per cent on the value up to £250,000, 5 per cent on the difference between £250,000 and £925,000, 10 per cent between £925,000 and £1.5 million, and 12 per cent above this.
A stamp duty holiday introduced by former chancellor Rishi Sunak came to an end last year. Spikes in demand were seen as buyers rushed to take advantage.