With the Autumn Budget just months away, Britons are bracing for potential tax hikes after Prime Minister Keir Starmer revealed a £22 billion shortfall in the country’s finances that urgently needs addressing.
Inheritance tax, capital gains and dividends tax changes are under speculation, but there’s one tax rise set to come into effect.
Stamp duty is a tax paid on property purchases in the UK, with the amount depending on the property’s value.
As part of the upcoming changes, significant adjustments to stamp duty thresholds are set to come into effect, impacting both first-time and general homebuyers.
Homebuyers currently pay stamp duty in England and Northern Ireland if their home costs more than £250,000. In March 2025 this will drop to £125,000 – taking the tax bill on an average-priced home in England from £2,768 to £5,268.
Meanwhile, a temporary stamp duty threshold allows first-time buyers to pay £0 on properties worth up to £425,000.
This threshold is set to revert to £300,000 in April 2025, which will significantly increase the costs for those entering the housing market. For a sole residence worth £425,000, Britons would pay a staggering £8,750 levy from April.
There is also an additional three percent surcharge for anyone buying an additional property.
During a speech held in the Downing Street Garden on Tuesday morning, Sir Keir Starmer said: “There is a Budget coming in October, and it’s going to be painful. We have no other choice, given the situation that we’re in.”
According to the latest HMRC figures, homebuyers paid £1.2billion in Stamp Duty in July. So far this year, homebuyers have paid out £6.6billion on the tax, which is £100million more than the same period last year.
Jonathan Stinton, head of mortgage relations at Coventry Building Society, said: “The Treasury is taking in huge sums of property taxes while homebuyers are racking up the debt.
“A Stamp Duty bill can be thousands of pounds so if people don’t have that amount lying around they’ll probably need to borrow more to cover the tax on their home.”
Mr Stinton noted that in seven months, the balance will shift further in the Treasury’s favour as the nil rate band is reduced to £125,000. He urged the Chancellor to use the October Budget as an opportunity to restore balance by announcing changes that would prevent a sudden £2,500 tax increase on an average-priced property.
While this might pose short-term challenges for the Chancellor, Mr Stinton said it could lead to long-term benefits for the broader economy.
He added: “Reducing the burden on homebuyers doesn’t have to be too costly for the Treasury either –the Stamp Duty holiday in 2020 and 2021 proved that homebuyers can get a break and tax revenue can remain healthy.
“It may even benefit the economy as people could spend the extra cash on improving their new home, boosting the retail and services sectors and returning some tax revenue through VAT.”
