Stamp duty will increase for millions of homeowners if the Labour wins next week’s General Election with Britons at risk of being hit by an extra tax charge.
Sir Keir Starmer will not renew the current tax relief for first-time property purchases in what experts claim will be “worrying for buyers”.
Under Labour, the threshold for stamp duty will fall back to £300,00 after it was raised to £425,000 during Prime Minister Rishi Sunak’s tenure as Chancellor.
This confirmation comes after Sir Keir Starmer looked to have announced the tax relief’s end on BBC Radio 5 Live.
Sunak has previously pledged to keep the tax break for first-time buyers, which is estimated to cost nearly £600million, but Labour has not committed to do the same.
During a phone-in interview, Starmer said he would end the rule that would allow individuals to withdraw 25 per cent of their pension without paying a lump sum.
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He said: “It runs out in a number of years, and we’re not going to renew it.”
Despite this, Labour have clarified that the 25 per cent tax relief did not have an expiry date and the party’s leader was in fact referencing about temporary relief the hiked stamp duty relief.
A spokesperson said: “The ability to withdraw 25 per cent of your pension as tax free lump sum is a permanent feature of the tax system and Labour are not planning to change this.
“Keir was referring to temporary tax breaks in the system that are due to expire and which the public finances assume will not continue, like increasing the stamp duty threshold for first-time buyers from £300,000 to £425,000.”
What is stamp duty?
This is a levy someone might have to pay when buying a residential property or piece of land in England which costs more than £250,000.
However, first-time homebuyers are able to claim relief on their first purchase which can save Britons a sizable amount.
Currently, there are several rates of stamp duty which are charged on someone’s purchase based on how much the property is going for.
No tax is paid on properties which cost under £250,000 but a five per cent rate is charged to purchases between this amount and £925,000.
Any homes which are priced above £925,000 and between £1.5million are awarded a 10 per cent rate.
Purchases of properties which are prices higher than this amount are hit with a 12 per cent tax charge.
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Rob Houghton, the founder and CEO of Reallymoving, outlined how those hoping to get on the property ladder could be adversely affected financially by this policy U-turn.
He explained: “The fact that so far Labour haven’t matched the Conservatives’ policy to make the current higher stamp duty thresholds more permanent, will be worrying many first-time buyers hoping to get on the ladder in the next couple of years.
“If Labour win, some may well attempt to bring their plans forward if finances will allow, to try and exchange contracts before the end of March next year. In London especially, the potential savings – at over £6,000 on average – are considerable.
“Our research shows it already takes the average First Time Buyer nearly 6.5 years to raise the funds needed to buy a home, rising to 8.5 years in London, and it will take even longer if stamp duty thresholds are lowered once again. Whichever party wins the election, immediate and meaningful help for first-time buyers must be one of their top priorities.”
