Stamp duty change to go ahead next week as Spring Statement focuses on spending cuts
A MAJOR stamp duty change WILL come into effect from next week after the Government ruled out extending a freeze.
Chancellor Rachel Reeves ruled out extending the stamp duty holiday in place until March 31 in her Spring Statement today.
Meanwhile, there was nothing in Spring Statement documents stating the freeze would be extended.
It comes as the Chancellor announced plans to cut the welfare bill to get the economy growing again. She also announced:
- No new tax rises: The Chancellor ruled out further tax hikes and pledged to crack down on tax avoidance, aiming to raise an extra £1bn.
- Growth downgraded for 2025: The OBR halved its GDP growth forecast for next year from 2% to just 1%.
- Growth boost from planning reforms: New housing policies expected to raise GDP by 0.6 per cent over the next decade.
- Housebuilding surge: 1.3 million homes expected over five years, with construction hitting a 40-year high.
- £2.2bn extra for defence: Additional funding confirmed to help meet the 2.5 per cent of GDP defence target.
- £400m Defence Innovation Fund: Backing new tech like drones and AI for the front line.
- Civil service cuts: New voluntary exit schemes and AI tools to shrink Government.
Since September 2022, stamp duty thresholds have been hiked from £125,000 to £250,000 for anyone buying a property.
First-time buyers have also not had to pay stamp duty on homes worth up to £425,000, a rise from £300,000.
Meanwhile, for properties costing up to £625,000, first-time buyers currently pay no stamp duty on the first £425,000, then 5% on the £200,000 in between these amounts.
However, from April 1, these thresholds are reverting back to their previous amounts, meaning you will have to pay the tax on lower value properties.
For anyone buying a property, you will have to start paying stamp duty on homes from £125,000.
First-time buyers will have to start paying stamp duty on homes from £300,000 while the 5% rate will apply from £300,001 to £500,000 instead of £425,000 to £625,000.
Chris Sykes, technical director at Private Finance, said the end to the stamp duty holiday would “increase the tax burden for many first-time buyers”.
What does it mean for me?
The change from April 1 will see more people having to pay stamp duty on lower-priced homes.
Recent research from Zoopla revealed the changes could see some first-time buyers forking out £11,250 more on average.
As an example, a first-time buyer purchasing a £500,000 home before the end of the holiday pays £3,750 stamp duty.
They pay nothing on the first £425,000 and 5% on the remaining £75,000 (£3,750).
However, from April 1, they will pay 0% on the first £300,000 and 5% on the remaining £200,000 (£10,000) – a difference of £6,250.
Someone buying a second home valued at £300,000 before the end of the holiday pays 5% stamp duty on £50,000 (£2,500).
However, from April 1, they pay a 2% rate of stamp duty from £125,001 to £250,000 then 5% from £250,001 to £300,000.
This works out as £2,500 plus £2,500 – £5,000 total, a 50% rise.
House prices hit record highs before end of stamp duty holiday
House prices hit record highs last year, according to Halifax, as prospective homeowners looked to before the end of the stamp duty holiday.
The lender said the average house price was £298,083 in November, up from £293,999 in October.
The rise in November was the fifth month in a row prices went up, with an annual hike of 4.8%.
House prices grew the most in Northern Ireland, rising 6.8% annually, with property prices in Wales growing by 4.1%.
Meanwhile, house prices in the North West recorded the strongest growth of any region in England, up 5.9% compared to November 2023.
Properties in the West Midlands also saw strong price rises, increasing by 5.5% on an annual basis.
Alice Haine, personal finance analyst at Bestinvest, said “momentum returned to the market” as buyers looked to seal a deal before stamp duty changes.
What else was announced in the Spring Statement?
The Chancellor today unleashed deeper welfare cuts than anticipated in a bid to boost economic growth.
The benefit cuts, as well as cuts to the civil service, come as Reeves outlined the Office for Budget Responsibility’s (OBR) report into forecast growth.
The OBR downgraded its annual growth projections for 2025 from 2% to 1%.
However, GDP is expected to grow by 1.9% in 2026, 1.8% in 2027, 1.7% in 2028 and 1.8% in 2029.
Reeves said the steps taken today to make cuts will see the UK economy avoid falling into a budget deficit of £4.1billion by 2029/30.
Reeves said: “By the end of the forecast our economy is larger compared to the OBR’s forecast at the time of the (2024) Budget.”
What does this Spring Statement mean for Rachel Reeves?
By Ryan Sabey, Deputy Political Editor
Rachel Reeves is trying shift any blame away from herself and the Labour government as it grapples with the sluggish economy.
The Chancellor is telling MPs that the “world had changed” meaning she has to take drastic action when it comes to spending and welfare.
The trouble for Ms Reeves and Sir Keir Starmer is that they put growth as their “number one” mission and that, to put it mildly, is stalling.
The independent watchdog say growth forecasts has halved for this year and the financial headroom wiped out – hence the savings to be made elsewhere.
But for Ms Reeves all this puts her in a very tight spot insisting she will stick to her iron clad rules – with her looking to find up to £15 billion of savings.
The Tories and commentators are aiming their fire over how she hasn’t helped herself as growth has fallen.
They point out that she was the person who decided to go on a £40 billion tax raid at October’s Budget – with £25 billion of it falling on the shoulders of business.
The upcoming Donald Trump-led tariff war ledcould easily throw the government off course again unless a limited trade deal can be struck.
Rachel Reeves will be pushing every leaver possible to get that over the line before it kicks in next week to give her some breathing space.
But we could be back at square one come the autumn with the Budget to balance the books – with speculation there could be tax rises and Whitehall departments scratching around for more savings.
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