Sep

Chancellor Kwarteng hints at Stamp Duty cut in radical bid to boost growth

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Speaking in New York, Liz Truss says she’s willing to take radical and unpopular decisions to boost the UK economy in an attempt to head off an impending recession.

The prime minister confirmed the reversal of the national insurance tax hike to be officially announced by the Chancellor in Friday’s mini budget. In addition, Mr Kwarteng plans to cancel a planned corporation tax rise and has hinted at a stamp duty cut.

Former Chancellor Rishi Sunak planned to increase corporation tax, from 19 per cent to 25 per cent, from April 2023. Truss and her chancellor argue that cancelling the planned rise will boost business investment in the UK and help drive economic growth towards their target increase of 2.5 per cent of GDP each year.

It was reported by The Times newspaper that Chancellor Kwarteng is also planning a cut in stamp duty. In what would be a surprise move to boost the property industry and with it the economy as a whole, confirmation is awaited on Friday. Downing Street refused to comment said the newspaper.

Speaking from the Empire State Building, with a large vista of the famous city in the background, Ms Truss confirmed that she is willing to make some radical and unpopular decisions if they are likely to result in a boost to the UK economy. At this time of rising energy costs and huge government subsidies being applied to protect homes and businesses these measures are a brave move.

The reversal of the 1.25 per cent National Insurance Contribution (NICS) rise in April, originally targetted to fund the NHS and adult social care, will immediately put money back into the pockets of wage earners.

Scrapping the bankers’ bonus cap, designed to attract more talent into the City of London, is an unpopular decision in some quarters, but aimed at boosting the City, one of the biggest revenue earners for the country, and seen as a priority for growth – one worth taking flak for?

Truss has said:

“If we put up taxes, if we have arbitrary taxes on energy companies, if we have high corporation tax, we’re not going to get that investment and growth.

“In order to get that economic growth, Britain has to be competitive. If we put up taxes, if we have arbitrary taxes on energy companies, if we have high corporation tax, we’re not going to get that investment and growth.

“What we know is people on higher incomes generally pay more tax so when you reduce taxes there is often a disproportionate benefit because those people are paying more taxes in the first place.

“We should be setting our tax policy on the basis of what is going to help our country become successful. What is going to deliver that economy that benefits everybody in our country. What I don’t accept is the idea that tax cuts for business don’t help people in general,” she said.

Stamp duty land tax is a tax you pay on all property purchases.

In July 2020, the Government cut stamp duty to boost the property industry and help buyers during Covid. Until 31 March 2021 home purchases didn’t attract stamp duty on the first £500,000 of a purchase price. This was a big saving of up to £15,000 for those who were buying at the time. The stamp duty holiday was later extended until 30 June, and finally again until 30 September.

During Covid in this later period home buyers didn’t have to pay stamp duty on the first £250,000.

From 1 October 2021, rates return to pre-Covid levels. That means the point you start paying stamp duty will be £125,001:

– £0-£125,000 = 0%

– £125,001-£250,000 = 2%

– £250,001-£925,000 = 5%

– £925,001-£1,500,000 = 10%

– £1,500,001+ = 12%

There is a higher rate surcharge of 3 per cent for the purchase of any property which is addition to your main home. You’ll usually have to pay 3% on top of these stamp duty rates if you are buying a second home or buy-to-let.

The government’s Stamp Duty Land Tax (SDLT) calculator will tell you how much tax you pay on a property purchase.

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