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Stamp duty cut to go ahead despite Hunt ditching other tax measures
Today the new chancellor has announced that the “permanent” cut to stamp duty tax will go ahead despite ditching nearly all of the other tax measures announced in the Mini Budget last month.
Jeremy Hunt confirmed in a short statement this morning that the plan to double the stamp duty threshold will still go ahead despite scrapping almost all of the other tax measures that he said have not been legislated for in parliament.
The chancellor’s predecessor, Kwasi Kwarteng, announced during his Mini Budget in September that stamp duty would be doubled to £250,000.
For first-time buyers, who pay no stamp duty on the first £300,000, that threshold will rise to £425,000.
It was one of few measures kept by Mr Hunt, whose speech today was aimed at providing stability and confidence in the government’s commitment to fiscal discipline after the measures announced in the Mini Budget spooked gilt markets.
It also saw ratings agency S&P lower the whole of the UK’s credit outlook from stable to negative at the end of last month.
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Mr Hunt said government departments will be asked to find efficiencies within their budgets to help put the UK’s public finances on a sustainable path for the medium term.
The Local Government Association (LGA) said this prospect will send a “collective shiver down the spine of local government”.
The basic rate of income tax will remain at 20% until economic conditions allow for it to be cut, while the IR35 and dividend tax rate reforms are also no longer going ahead, Mr Hunt revealed.
Today’s announcement followed the reversal of the corporation tax cut on Friday last week.
The chancellor also announced that support for people facing higher energy prices through its “energy price guarantee” will still go ahead until April next year, but a Treasury-led review will be launched after this date to consider a new approach going forward.
Mr Hunt plans to publish the government’s fiscal rules alongside an Office for Budget Responsibility forecast, as well as further measures, on 31 October.
In response to the chancellor’s emergency statement, the LGA, which represents more than 350 councils across England and Wales, said the financial sustainability of local services are already on a cliff-edge.
James Jamieson, chair of the LGA, said: “The news that government departments have been tasked with identifying efficiency savings from public sector budgets has sent a collective shiver down the spine of local government. It comes at a time when the future financial sustainability of councils and local services is already on a cliff-edge.”
He pointed out that council budgets have already been undermined by rising inflation, alongside increases to the National Living Wage and higher energy costs, adding at least £2.4bn in extra costs on to the budgets councils set in March this year.
Mr Jamieson added: “The government needs to ensure councils have the funding to meet ongoing pressures and protect the services that will be vital to achieve its ambitions for growth and to produce a more balanced economy, level up communities and help residents through this cost of living crisis.
“Without certainty of adequate funding for next year and beyond – and given the funding gaps they are seeing – councils will have no choice but to implement significant cuts to services including to those for the most vulnerable in our societies.”
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