News

Stamp duty cuts for first time buyers – is the Chancellor planning cuts specifically for the young?

A 1% stamp duty cut could be on the cards in November

A cut in stamp duty for first-time buyers could be part of new efforts by the Government to win back young voters in next month’s budget.

The Chancellor, Philip Hammond has already hinted that at the heart of the autumn budget will be measures to help younger people get onto the property ladder.

The Chancellor has however been was warned off the idea of linking tax to age as party backbenchers insist that older voters should not be played off against younger generations.

Currently stamp duty is charged on all homes over £125,000, initially at 2 per cent of the value between £125,000 and £250,000, but the marginal rate rises as the property’s value increases.

Purchase priceStamp Duty RateStamp duty rate for additional properties
Up to £40k00
Over £40k to £125k03%
Over £125k to £250k2%5%
Over £250k to £925k5%8%
Over £925k to £1.5m10%13%
Over £1.5m12%15%

In London, where house prices are particularly steep, the average first-time buyer faces a tax bill of £11,427, according to the Land Registry.

Bim Afolami, the MP for Hitchin & Harpenden, welcomed the possibility of a cut in stamp duty but warned against raiding older voters to help younger generations.

“I think that the chancellor should look at everything in the round, and lower rates for younger people to do certain things — for example lowering stamp duty for first time buyers — is an interesting idea,” Mr Afolami, of the party’s youngest MPs at 31, said. “But we need to get away from the idea that we need to take money from older people to give to younger people.

“We need to look at the issue of intergenerational fairness in a reasoned, balanced way — not by robbing Peter to pay Paul.”

Jacob Rees-Mogg, the prominent backbencher, said that Mr Hammond should instead focus on tax cuts and planning for a no-deal Brexit. “I am not sure that setting the generations against each other is likely to lead to good policy,” he also recently commented that “ stamp duty must be cut “as a matter of urgency” as part of a return to Conservative values if the party is to win the next election.

He supported changes to stamp duty, however. “Stamp duty needs looking at as it is having perverse effects on the London market. It is a good tax at low levels but an economically damaging one at the current penal rates.”