Rishi Sunak Considers Cutting Stamp Duty Threshold in Autumn Statement

UK Chancellor Rishi Sunak may cut stamp duty to £300k, saving buyers up to £2.5k, but costing £3bn annually. This pre-election tax cut aims to boost Tory support, though past cuts had little effect on polls.

Ayesha Mumtaz
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Rishi Sunak Considers Cutting Stamp Duty Threshold in Autumn Statement

Rishi Sunak Considers Cutting Stamp Duty Threshold in Autumn Statement

Rishi Sunak is reportedly considering lowering the stamp duty limit from £250,000 to £300,000 in the upcoming autumn statement. If implemented, this move would mean nearly half of all homebuyers would pay no stamp duty, potentially saving up to £2,500. However, the proposed cut is estimated to cost the exchequer around £3 billion annually by 2028-29.

The stamp duty reduction is seen as a pre-election incentive for voters, as the Conservatives are currently trailing Labour in the polls. Prime Minister Sunak has also hinted at further cuts to National Insurance contributions, as part of the government's "long-term ambition" to end the "double taxation" of work. The autumn statement is expected to be timed to give the government the chance to offer these tax-cutting measures before a potential late-year general election.

Chancellor Hunt is facing pressure from backbench Conservatives for a range of other tax cuts, but the impact of previous national insurance cuts has had little effect on the polls, with the Conservatives facing record low support. The feasibility and timing of the stamp duty cut are still being discussed, with nearly six months until the likely date of the autumn statement.

Why this matters: The proposed stamp duty cut could provide significant savings for many homebuyers and potentially stimulate the housing market. However, it also raises questions about the long-term impact on government revenue and the effectiveness of tax cuts in boosting the Conservatives' electoral prospects.

The stamp duty plan was previously explored ahead of the Spring budget, but the Chancellor ultimately decided against it due to concerns about fueling inflation. With inflation now falling, the Conservatives are more confident they can offer this tax cut to voters ahead of the general election, which is expected to be held in the second half of 2024. The stamp duty cut would particularly favor voters in the South East, where property prices are higher.

In addition to the stamp duty proposal, the government is also considering a further 2p cut in national insurance to reduce most people's tax bills. However, there are concerns that this could stoke inflation again and potentially move the election date forward. As the autumn statement approaches, the details and timing of these potential tax cuts will continue to be a topic of discussion and debate within the government and among the public.

Key Takeaways

  • UK Chancellor considering lowering stamp duty limit to £300k, saving buyers up to £2.5k.
  • Proposed cut estimated to cost exchequer £3 billion annually by 2028-29.
  • Stamp duty cut seen as pre-election incentive as Conservatives trail Labour in polls.
  • Chancellor also hinting at further cuts to National Insurance contributions.
  • Feasibility and timing of stamp duty cut still being discussed, with inflation concerns.