This month’s Budget is a pivotal event for Andy Burnham and John Healey (Image: Michael Bowles/Shutterstock)
Chancellor John Healey has been urged to grasp an opportunity to save families thousands of pounds and ease Britain’s housing crisis by axing stamp duty in this month’s Budget. This would be an audacious move, seen as a Labour Chancellor taking hold of an issue on which Kemi Badenoch plans to fight the next election – but the Institute of Economic Affairs (IEA) claims it would remove a “major barrier” to economic growth.
It wants Stamp Duty Land Tax (SDLT) abolished entirely on residential and non-residential property transactions in England and Northern Ireland. The Conservatives have pledged to scrap the tax on primary residences but the IEA makes the case for going further in a bid to “unlock Britain’s housing market”. Its analysis found that under standard residential stamp duty rates, someone buying a £500,000 home would save £15,000 if it was abolished. A buyer purchasing a £300,000 home would save £5,000.
The IEA argues stamp duty not only adds thousands of pounds to the cost of buying a home, it discourages households from moving for work, switching to homes that better suit their families or downsizing in retirement.
Valentin Boboc, the IEA’s chief economist, said: “Politicians are finally recognising that stamp duty is a damaging tax, but the Chancellor has an opportunity to go further and abolish it altogether. People should not face a huge tax penalty for moving for work, finding a home that better suits their family or downsizing in retirement. Stamp duty doesn’t just make moving more expensive. It discourages transactions, reduces mobility and prevents homes from being put to their most productive use. Scrapping it would cut the cost of moving, help get Britain’s housing market moving again and remove an unnecessary barrier to economic growth.”
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Katie Lam wants to axe stamp duty on homes (Image: AFP via Getty Images)
Strong support has come from John O’Connell, chief executive of the TaxPayers’ Alliance. He said: “Stamp duty is a terrible tax that acts as a direct penalty on aspiration, mobility, and economic growth. Taxing people tens of thousands of pounds simply for moving home, relocating for work, or downsizing in retirement clogs up the housing market and drags down the wider economy. The Chancellor should listen to these calls and scrap this damaging tax altogether.”
Shadow Housing Secretary Katie Lam said: “Stamp duty is one of the worst taxes – it’s a tax that restricts every part of the housing market. It stops older people from downsizing and families from scaling up, and prevents aspirational younger people getting on the housing ladder in the first place. Labour has catastrophically failed to deliver the homes Britain needs, and their ever-growing list of taxes pushes the dream of owning a home further away for millions of aspirational, hard-working people. By scrapping stamp duty on the family home the next Conservative Government will get every part of the housing market moving.”
The Home Builders Federation is pressing for the Government to “the number of first-time buyers having to pay stamp duty”. A spokesperson said: “The costs facing homebuyers is significantly limiting the number of housing market transactions, bringing significant economic and social consequences. Housing market activity is much lower today than in previous generations but every 100,000 home moves creates £1billion in economic activity.”
A Treasury spokesperson said: “As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”
John Healey Urged to Save Families £15,000 and Rescue UK from ‘The Worst Tax’
Chancellor John Healey is facing calls to abolish stamp duty, with campaigners arguing that the controversial property tax places an unnecessary financial burden on families and prevents Britain’s housing market from functioning effectively.
The proposal has attracted attention ahead of the Government’s upcoming Budget, with the Institute of Economic Affairs (IEA) urging ministers to remove the tax on property transactions altogether. According to the think tank, abolishing stamp duty could save some homebuyers thousands of pounds while encouraging people to move for work, find more suitable homes and downsize in retirement.
The potential savings are substantial. Under standard residential stamp duty rates in England and Northern Ireland, a buyer purchasing a property worth £500,000 could save £15,000 if the tax were abolished. Someone buying a £300,000 property could save £5,000. These figures have become central to the argument that the tax deserves a fundamental rethink.
However, the proposal presents Healey with a difficult choice. Removing stamp duty could reduce the upfront cost of moving home, but it would also mean giving up a source of government revenue at a time when ministers face competing demands for public spending.
Why Stamp Duty Has Become a Target
Stamp Duty Land Tax is charged on qualifying property purchases in England and Northern Ireland. The amount payable depends on the property price, the buyer’s circumstances and the applicable tax thresholds and rates.
For many households, buying a home is already one of the largest financial commitments they will ever make. Buyers must consider deposits, mortgage payments, legal fees, surveys, removals and other expenses associated with completing a transaction.
Stamp duty can add thousands of pounds to that total.
The tax can be especially frustrating for people who are not buying a more expensive property for investment purposes but simply need a home that better suits their circumstances. A growing family might need an additional bedroom, while an older couple may wish to move into a smaller property that is easier to maintain.
In other cases, a worker may receive a job offer in another part of the country but hesitate to relocate because moving would involve substantial additional costs.
The IEA argues that stamp duty discourages these decisions by making a change of home more expensive. Instead of allowing households to move when their needs change, the tax can encourage them to remain in properties that are no longer appropriate.
That matters because housing is not merely an investment. It is also a means of matching people with employment opportunities, family requirements and changing financial circumstances.
If households are reluctant to move, properties may not be used as efficiently as they could be. Larger homes can remain occupied by people who would prefer to downsize, while growing families struggle to find suitable accommodation in their preferred areas.
Critics say stamp duty contributes to this problem by placing an additional financial penalty on transactions.
How Families Could Save £15,000
The £15,000 figure is based on the stamp duty payable on a £500,000 residential property under standard rates in England and Northern Ireland.
If the tax were abolished entirely, an eligible buyer making that purchase would no longer have to pay the corresponding stamp duty bill. The money could instead be used towards moving expenses, home improvements, savings or other household priorities.
For a buyer purchasing a £300,000 home, the equivalent saving under the same standard-rate assumptions would be £5,000.
Those sums can make a meaningful difference to household finances, particularly when buyers are already stretching their budgets to meet mortgage affordability requirements.
However, the savings would not be identical for everyone. First-time buyers may qualify for relief under existing rules, while additional-property purchases and other circumstances can result in different tax liabilities. The headline figures should therefore be understood as examples rather than a guarantee that every household would receive the same benefit.
There is also an important distinction between eliminating a tax and making homes more affordable overall.
Abolishing stamp duty would reduce the transaction costs faced by buyers, but it would not automatically lower property prices, mortgage interest rates or deposits. In areas where housing supply is severely constrained, some of the financial benefit could potentially be reflected in higher prices if demand increased.
For that reason, any stamp duty reform would need to be considered alongside policies designed to increase housing supply and improve access to homeownership.
The IEA Says Stamp Duty Holds Britain Back
The Institute of Economic Affairs wants stamp duty abolished on residential and non-residential property transactions in England and Northern Ireland.
Its argument is that taxing property transactions discourages people and businesses from making changes that could improve how homes and commercial premises are used.
Valentin Boboc, the IEA’s chief economist, has argued that people should not face a substantial tax penalty simply for moving to another home, relocating for work or downsizing during retirement.
From this perspective, stamp duty is not just a way of raising money for the Treasury. It can also affect decisions that influence economic activity.
A family that cannot afford to move may remain in a property that no longer meets its needs. A retired homeowner may postpone downsizing because the tax and associated moving costs outweigh the expected benefits. A worker may turn down an employment opportunity because relocating would be too expensive.
Businesses can face related challenges when purchasing premises or reorganising their operations.
The IEA believes abolishing the tax would help remove these obstacles and encourage more transactions across the housing market.
Supporters also argue that a more active property market can generate economic activity in related industries, including estate agency, conveyancing, removals, renovation and home furnishing.
Every completed move can create work for businesses involved in the process. If fewer households move because of high transaction costs, those businesses may experience weaker demand.
Nevertheless, the scale of any economic benefit would depend on how buyers, sellers and businesses responded to reform. A tax cut could stimulate transactions, but it would not by itself resolve every obstacle facing Britain’s property market.
The Political Challenge Facing John Healey
The proposal puts Healey in a politically sensitive position as he prepares the Budget.
The Conservatives have pledged to abolish stamp duty on primary residences, while the IEA is advocating a broader change that would cover residential and non-residential transactions. The debate therefore provides an opportunity for Labour to consider whether it wants to adopt a reform traditionally associated with opposition calls for lower property taxes.
Shadow Housing Secretary Katie Lam has criticised stamp duty as a barrier to homeownership and argued that it prevents families from moving into larger properties and older people from downsizing.
The political dispute reflects a wider disagreement about how best to make housing more accessible.
One side emphasises the need to reduce taxes and other costs that prevent households from buying or moving. Another concern is that reducing transaction taxes could benefit existing homeowners without doing enough to help people who cannot afford a deposit or find a suitable property.
Both issues are important. A household that already owns a home may benefit directly from lower transaction costs when moving, whereas a prospective first-time buyer may still struggle with high prices, deposit requirements and mortgage affordability.
For the Government, the question is whether stamp duty reform could be designed to deliver broader benefits without creating an unsustainable loss of revenue.
What Would Abolition Mean for the Treasury?
Stamp duty generates revenue that contributes towards public finances. Abolishing it would therefore require ministers to consider how the lost income would be managed.
The Treasury would need to weigh the immediate cost of the tax reduction against the possibility that a more active housing market could generate additional economic activity and revenue elsewhere.
However, those potential benefits are not guaranteed to replace the lost receipts. The outcome would depend on the number of additional transactions, the wider economic response and the details of any replacement tax arrangements.
The Government must also consider the distribution of the benefits. Households purchasing expensive properties would generally have more to gain in absolute terms from abolishing stamp duty than buyers whose transactions attract little or no tax under existing rules.
Critics of broad abolition may argue that public money could be better spent helping first-time buyers, increasing affordable housing provision or supporting essential public services.
Supporters would respond that removing a transaction tax could improve mobility across the entire market rather than concentrating assistance on a particular group.
The decision is ultimately a question of priorities: whether the economic and household benefits of abolishing stamp duty would justify the revenue given up.
Housing Supply Remains a Crucial Issue
Even if Healey chose to abolish stamp duty, Britain would still face the challenge of providing enough suitable homes.
Reducing the cost of moving could encourage more people to put properties on the market, potentially making it easier for households to find accommodation that suits their needs. But a sustained improvement in affordability also depends on the availability of homes in the places where people want to live.
Planning decisions, infrastructure, construction costs, access to finance and the availability of skilled workers all influence how quickly new housing can be delivered.
If demand rises without a corresponding increase in supply, some of the benefit of a tax reduction could be absorbed by higher prices.
This is why stamp duty reform is best understood as one possible element of a wider housing strategy rather than a complete solution.
A comprehensive approach could combine lower transaction costs with measures to encourage construction, improve transport connections and increase the availability of homes for first-time buyers and families.
Such a package would address both the difficulty of moving between existing properties and the deeper shortage of suitable accommodation.
Will Healey Act Before the Budget?
The call to abolish stamp duty gives Healey a clear policy choice ahead of the Budget: retain the existing system, introduce a more limited reform or pursue the broader abolition advocated by the IEA.
The Chancellor has not committed to adopting the proposal, and the Treasury has maintained that tax decisions will be set out through formal fiscal announcements rather than speculation about individual measures.
For households planning to buy or sell, it would therefore be unwise to assume that stamp duty will disappear or to make financial decisions on the expectation of a tax change.
The £15,000 saving remains a calculation based on a hypothetical abolition, not a confirmed benefit available to buyers.
Yet the debate highlights genuine concerns about the costs associated with moving home. For families needing more space, older people seeking a smaller property and workers considering relocation, transaction taxes can be a significant part of the decision.
Whether abolishing stamp duty would produce enough wider economic benefits to justify its cost remains contested. What is clear is that the issue reaches beyond the immediate tax bill and touches on housing mobility, household finances and the efficient use of the country’s existing homes.
As the Budget approaches, Healey will have to decide whether stamp duty should remain an important source of public revenue or whether reform could help make Britain’s housing market more flexible.
For supporters of abolition, the potential £15,000 saving on a £500,000 property is a powerful illustration of what buyers could keep in their pockets. For the Government, the challenge is to determine whether that saving could form part of a credible plan to improve housing mobility while maintaining sustainable public finances.