What is stamp duty and will be it be scrapped?

The chancellor has long been rumoured to be considering an end to the tax, with a single annual property payment to replace both stamp duty and council tax.

Campaigners, including presenter Kirstie Allsopp, have called for its abolition, arguing that it puts a barrier on people being able to move house.

This is where we are at.

What is stamp duty?

Stamp duty is a tax that is paid in England and Northern Ireland on any home worth more than £125,000. Scotland and Wales apply separate property taxes.

The tax applies in “slabs”, with home buyers paying increasing portions of the property price when they purchase a residential property, such as a house or flat.

For example, the current “nil rate” band for a home-mover purchasing a property as their only home is £125,000, having recently been reduced from a higher threshold of £250,000.

Home-buyers usually have to pay 5% on top of stamp duty rates if buying a new residential property means that they will own more than one.

However, in some cases, buyers may not have to pay the extra 5% if they are replacing their main home and selling their previous one.

Why is stamp duty unpopular?

Posting on X, Dan Neidle, founder of Tax Policy Associates, said that in situations where people are buying a house and “everything is simple, you can ask your conveyancer how much stamp duty to pay”.

But he said in complex situations it does not work.

The bigger point: stamp duty is a confusing mess. The tax shouldn’t exist. The second home surcharge is daft.

“Why are we taxing someone who buys two £500k homes £55k (£15k + £40k), But someone who buys one £1m home £43k? Where’s the logic?”

Allsopp said: “I’m seeing it all the time… what I see is young people buying more expensive houses really than they can afford because they know they can’t pay stamp duty twice.

“The other thing I’m seeing a lot of is people altering two and three-bed houses rather than moving, because the cost of moving is so high.

“I think we’re actually damaging our first-time buyer housing stock because of stamp duty.”

What could replace stamp duty?

It was rumoured in August that a new levy would be paid by owner-occupiers on houses worth more than £500,000 when they sell their home.

This amount would be betermined by the value of the property and a rate set by the Government.

It has not been confirmed what could replace stamp duty, or if it will even be abolished at all.