Chancellor confirms stamp duty cuts will end in March 2025

The stamp duty cuts first announced in the mini-Budget will now be in place until 31 March 2025, the Chancellor has confirmed.

These changes to the nil-rate thresholds that homebuyers pay stamp duty had been among the few policies to survive Kwasi Kwarteng’s fiscal announcement in September.

Delivering his Autumn Statement to the House of Commons, Jeremy Hunt confirmed that the stamp duty threshold will stay at £250,000, and £425,000 for first-time buyers, before returning to £125,000, and £300,000 for first time-buyers in 2025.

On Kwarteng's mini-budget, Hunt told MPs the former Chancellor was “correct to identify growth as a priority,” but said that “unfunded tax cuts are as risky as unfunded spending”, which led to the reversal of most of Liz Truss and Kwarteng’s plans.

Yesterday, the Office for National Statistics reported that inflation had climbed to 11.1% in the year to October, a 41-year high for the annual rate of Consumer Prices Index (CPI) inflation in the UK, and Hunt confirmed in his statement that the UK economy is already in recession.

Commenting on the confirmation of the government’s stamp duty plans, director of Benham and Reeves, Marc von Grundherr, said: “Homebuyers have been stretched to breaking point in recent weeks, not only by the rising cost of living, but also due to increasing mortgage costs.

“So they may well feel that they’ve been shown the cold shoulder today with the absence of any meaningful initiative designed to help stimulate the UK property market. Even more so given that the previous reprieve offered in the way of a stamp duty cut will now only run until the end of March 2025.

“At the same time, Jeremy Hunt’s raid on middle England and landlords, in particular, by slashing the amount exempt in capital gains tax is likely to disconnect this government even further from their traditional electoral base. It’s a risky strategy and one that confirms that the Conservative’s are no longer the party of the UK homeowner, which is sure to lose them votes further down the line.”

Amid his plans for personal taxes announced by the Chancellor to help grow the economy, Hunt announced the income tax threshold for when the highest earners start paying the top rate of tax will be brought down from £150,000 to £125,140. He said that “those earning £150,000 or more will pay just over £1,200 more a year”.

Hunt also confirmed the freeze on the inheritance tax (IHT) threshold will remain in place until 2028, as part of what he described as a range of “difficult decisions” to stabilise the economy.

Reacting to the income tax confirmation, partner at Mazars, Paul Barham, said: “Income tax was always going to be in the government’s sights. With a gaping hole in the public finances, it’s an easy target for the Treasury. Putting the thresholds on ice, and lowering the 45p tax band, is a double whammy and will raise billions for the treasury.

“Millions will be in the higher and additional rate tax bands in the coming years. And high earners will really feel the hit, with a higher proportion of their income subject to the 45% tax rate. Tax bills are only going in one direction for millions of people, and that is up.”

On the announcement around IHT, sales director at Standard Life Home Finance, Kay Westgarth, added: “The government’s decision to freeze the IHT threshold for two more years, which essentially amounts to a rise on future IHT, was expected by many but will be welcomed by few, with more people finding themselves sitting above the tax threshold when it comes to the value of their estates.

“Having set the nil-rate band at £325,000 in 2010, even the introduction of the nil-rate residential band in 2017 will not stop some ordinary homeowners from needing to pay IHT.”

Hunt also revealed that pensions will rise in line with September’s inflation rate of 10.1%, adding that as a result the government will be sticking to its “triple lock” on the state pension. This refers to the Conservative manifesto pledge that the state pension would rise in line with the highest of either the previous September's inflation figure, the average wage increase, or 2.5%.

Aegon pensions director, Steven Cameron, commented: “Honouring this manifesto commitment after ditching it last time round will provide much needed support for pensioners, many of whom are on low and fixed incomes and particularly vulnerable to rampant inflation. The government will no doubt have weighed up the reaction of pensioner voters if they scrapped the triple lock for a second consecutive year in the run-up to the next general election.
“But there’s a huge question mark over whether any party would recommit, in a future election manifesto, to paying the highest of price inflation earnings growth or 2.5% year on year. In volatile times, using an average over 3 years or even paying out the average of inflation and earnings increases each year might be more sustainable for government and predictable for pensioners.”

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