The Tories have vowed to abolish stamp duty – what is it and what will Labour and Reform do?
Kemi Badenoch has promised to abolish stamp duty if the Conservatives win the next election.
In a speech at the Manchester Convention Centre, Ms Badenoch promised that the move would help “millions of people” realize their “dream of home ownership” if the Conservative Party is returned to power.
Here’s everything you need to know stamp duty and what the parties say about it.
What is stamp duty?
Stamp duty land tax is charged by HMRC and is the tax you must pay when purchasing a property or land at a set price.
Unless you’re a first-time buyer, you’ll need to pay stamp duty on residential properties costing more than £125,000 in England and Northern Ireland. Separate property taxes apply in Scotland and Wales.
If you’re a first-time buyer in England or Northern Ireland, you won’t pay stamp duty on property purchases worth up to £300,000. This is called “first-time buyer relief.”
How much does it cost?
The amount of stamp duty you will pay is calculated based on the price of your property. This is calculated as a percentage that increases as the price of the property increases.
|
How much does the property or land cost you? |
Stamp duty rate to be paid |
|---|---|
|
up to £125,000 |
0% |
|
£125,000 – £250,000 |
%2 |
|
£250,000 – £925,000 |
5% |
|
£925,000 – £1.5 million |
10% |
|
£1.5 million+ |
12% |
Why does the Conservative Party want to remove it?
Ms Badenoch described stamp duty as a “bad tax”. He said: “We must deregulate our housing market, because a society where no one can afford to buy or move is a society where social mobility is dead.”
The party said the abolition of stamp duty would be paid for from the £47bn savings shadow ministers claim to have found, and that it would consist of welfare cuts, downsizing the civil service and further cutting the country’s foreign aid budget.
The Institute for Fiscal Studies estimates that removing stamp duty on primary homes would cost around £4.5bn; but the Conservatives offered a “cautious” estimate that it would cost £9bn by the end of the decade.
What does the government say?
Reports say Rachel Reeves may consider overhauling property tax, including replacing stamp duty with a national proportionate tax on the sale of homes worth more than £500,000.
This has been criticized as “a tax on ordinary Londoners”.
The proposals, prepared according to a think tank report, are currently under evaluation and no final decision has been made by the Treasury.
But this week Labor unveiled proposals that promise to speed up the home-buying process, which currently takes more than five months on average, by around four weeks.
Under the plans, sellers and estate agents will be required to provide buyers with vital information about a property in advance, including the condition of the home, rental costs and human chains waiting to move in.
The government said it would help “end nasty surprises resulting in last-minute crashes” and give first-time buyers more confidence.
Binding contracts could also be introduced to prevent people from walking away from agreements after months of negotiations.
What do other political parties say?
In its manifesto, the reform said it planned to reduce stamp duty to 0 for properties under £750,000, to 2 per cent between £750,000-1.5 million and to 4 per cent for over £1.5 million.
Meanwhile, Scottish Conservative Party housing spokeswoman Meghan Gallacher called on the Scottish government to embrace Ms Badenoch’s call.
He said: “This is a bidding policy and the SNP should introduce it in Scotland as soon as possible.”
