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As part of Chancellor Kwasi Kwarteng's £150bn mini-Budget support package, it is announced that Stamp Duty Land Tax will be cut in the following scenarios:
- Prior to the announcement this morning SDLT was required for all properties valued at £125,000 and above, however, the new changes ensure all properties purchased for below £250,000 will not have to pay SDLT.
- From today, first-time buyers will not have to pay SDLT on any property worth below £425,000.
- First-time buyers will also be eligible for First Time Buyers' relief on properties purchased for less than £625,000 rather than the previous threshold of £500,000.
- The Chancellor stressed that this is a permanent cut and is effective from today, in England and Northern Ireland only.
The overall objective of the 'low-tax, pro-growth' policy is to stimulate economic growth, with the expectation that it will lead to higher wages, investment, and movement of people. The Chancellor has declared that "the government has stepped in to stop businesses collapsing, protect jobs, and limit inflation"; he hopes that cutting the levy will encourage growth by allowing more people to move property and getting more first-time buyers on the housing ladder.
The likely success of the policy in achieving its objectives is uncertain, with predictions being made that by stimulating the economy by way of SDLT cuts, increased housing market demand will further push up house prices, at a time where supply is already limited.
The effects of the policy will unfold over the coming months and whether further reform aimed at tackling the housing supply-side issue will develop is yet to be announced.
Additional reforms:
Additional reforms actioned by the Chancellor include:
- A basic rate income tax cut of 1% to 19% from April 2023
- The proposed National Insurance rise of 1.25% is to be reversed from November 2022
- The bankers' bonuses cap has been scrapped
- The proposed Corporation tax rise from 19% to 25% has also been scrapped.
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*This article is provided for general information purposes only and does not constitute legal advice or other professional advice.
