Osborne announces £800m stamp duty cut

The chancellor of the exchequer, in his autumn statement today, announced the current ‘slab’ system, under which stamp duty jumps by a fixed sum at certain thresholds of home values, will be removed from midnight tonight.

It will be replaced by a system more akin to income tax, where taxpayers only pay a percentage on the amount over a certain band. Mr Osborne said only those buying homes worth £937,000 or more will see their stamp duty bill go up as a result of the changes.

Mr Osborne said: ‘In recent years the burden of stamp duty has increased on low and middle income families trying to buy a new home, as prices have risen.

‘This makes it even more difficult to get together the cash deposits buyers need.

‘It is time we fundamentally changed this badly-designed tax on aspiration.’

Richard Donnell, research director at residential property market analysis company Hometrack, said: ‘It [stamp duty] is an inefficient tax and acts as a barrier to market liquidity which is bad for labour mobility, but the flipside is that it makes a significant contribution to the Exchequer.

‘Calls for change are beginning to manifest into reality, which suggests that the government feels that stamp duty is starting to have a detrimental impact on labour mobility and the ability of households to access the housing market.’

He added: ‘The slab structure of stamp duty does create distortions at the price breaks and these have been around for years.  Moving towards a more progressive tax structure will help those looking to get on the ladder and will end up costing those with higher value homes more.’

The stamp duty move, which amounts to an effective £800m tax cut, was the sole housing policy announced in Mr Osborne’s speech today. The government’s latest housing policies, including an extension to the affordable homes programme and plans to pilot direct commission of homes, were announced by Danny Alexander, chief secretary to the Treasury, yesterday.