Chancellor Kwasi Kwarteng has today (23rd September) unveiled a substantial range of tax cutting measures in announcements designed to boost future economic growth. The radical proposals for slashing taxes swiftly follow on from the freeze on energy prices announced by the government earlier in the week.
SDLT will now only be applied to purchases of £250,000 or more and for first time buyers the rate at which SDLT will be payable will now start at £425,000.
The Chancellor also said that the basic rate of income tax will reduced to 19% as of April 2023 and that the top rate of income tax will be 40% instead of the current additional higher rate at 45%.
Increasing the SDLT tax-free thresholds for purchases of residential property will inevitably boost transaction levels in the residential property market. Kwarteng also indicated that the proposed changes are to be permanent, unlike the previous ‘SDLT holiday’ announced by his predecessor Rishi Sunak.
The measures announced by Kwarteng follow swiftly on from the Bank of England’s announcement on 22nd September that bank rate has been increased once again to 2.25%, up by 50 basis points. Savers will of course see this as a positive but anyone on a variable rate mortgage will likely soon see an increase in their borrowing costs as lenders adjust their rates.
Jeremy Raj, National Head of Residential Property at Irwin Mitchell commented:“These new measures will be greeted particularly warmly by buyers at the lower end of the market and by first time buyers, who will either benefit from a significant reduction in the amount of tax payable on transactions already in progress, or – as is the government’s aim – be encouraged to take that first step onto the housing ladder.
“It also appears to have been carefully constructed to ensure that the overall SDLT take of some £12Billion will not take too much of a hit, given the very high rates at the top of the market, which account for a large percentage of the total. Anything that stimulates the market without depleting the Government’s coffers excessively is likely to be helpful to the economy overall and on that basis should be applauded, particularly given that addressing the fundamental supply-side issues in our housing market can only be achieved over the long term.”
