Government introduces stamp duty ‘holiday’

2 September 2008

The Treasury has announced that no stamp duty will be payable for the next year on houses costing less than £175,000.

The move is part of a series of measures aimed at resuscitating the ailing housing market.

The Chancellor, Alistair Darling, has said that the threshold at which the 1 per cent purchase tax becomes chargeable rises from £125,000 to £175,000.

The ‘holiday’ on stamp duty payments comes into effect as from 3 September.

Stamp duty for now applies at 1 per cent to homes worth between £175,001 and £250,000, while the rate for houses between £250,001 and £500,000 is 3 per cent, and for those costing over £500,000, it is 4 per cent.

It is estimated that the move, which only covers properties intended for residential use, will save £1,750 for anyone buying a home worth £175,000.

The government believes that the change will mean that half of all housing property sales will now be exempt from stamp duty.

It is thought that the Chancellor, Alistair Darling, has been pondering a suspension of stamp duty for some time as a way of breathing new life into the moribund housing market.

Estate agents have argued that uncertainty over stamp duty relief has been putting potential home-buyers off making purchases this summer.

The duty holiday will see a fall of about £600 million in government income, a figure that indicates some half a million home-buyers are likely to save money on the relief.

The Treasury said the relief on homes worth less than £175,000 will apply to transactions with an effective date on or after 3rd September 2008 and before 3rd September 2009.