UK Government could AXE stamp duty for six months on homes up to £500k in boost for housing market

Chancellor Rishi Sunak is expected to announce plans for a temporary exemption for homes at the lower end of the market in his Autumn Budget. Treasury officials are looking at raising the threshold at which homebuyers start paying stamp duty.

The temporary measure would remove tax on the purchase of homes to target those most in need of help following the coronavirus crisis.

Currently the levy is not charged on the first £125,000 of the property selling price, with a 2 per cent rate up to £250,000 and 5 per cent on the next £675,000.

The new threshold, which would be put in place for six months to stimulate demand, is likely to be set at somewhere between £300,000 and £500,000. 

First-time buyers are already exempt from paying the duty on homes under £500,000 in London and £300,000 in the rest of the country. 

It is not yet clear how the new lower threshold will affect stamp duty liability on homes costing more than £500,000.

During the lockdown, Britons were told not to move house. This restriction has now been lifted, but the property market has remained sluggish.

According to HMRC data sales of homes in April fell to their lowest level since records began in 2005. There were just 38,060 transactions completed during the month – less than half the number seen at the same point a year ago.

Rishi Sunak will give an economic update to MPs on Wednesday afternoon, but they will have to wait until autumn for the next Budget when the stamp duty holiday is expected to be announced.

Also, a huge expansion of apprenticeships is expected to be one of the biggest announcements this week, with all young people expected to be guaranteed the opportunity of one.

To encourage Britons to go out and start spending this summer, Mr Sunak is expected to announce an immediate reduction in VAT for the hospitality industry.