PolicyLens

Methodology note

Cut stamp duty below GBP 750,000: calculation note

Assumptions behind the Cut stamp duty below GBP 750,000 scenario. Implementation detail is incomplete, so uncertainty is explicit.

View main policy page: Cut stamp duty below GBP 750,000

Central fiscal result

+GBP 7.5bn - Net fiscal impact in 2027-28

Low case: +GBP 4.0bn. High case: +GBP 12.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

  • Residential SDLT is zero below GBP 750,000.
  • Rates above GBP 750,000 fall to 2% and 4%.
  • The model covers England and Northern Ireland only.
  • No replacement property tax is included.

Affected population

  • Affected units are residential property transactions.
  • Buyers below GBP 750,000 receive the largest rate cut.
  • Existing owners may capture price gains.
  • Renters benefit only indirectly, if at all.

Gross impact

  • HMRC SDLT ready-reckoners anchor rate-cut costs.
  • Central cost assumes activity offset but price capitalisation risk.
  • Low case allows stronger transaction growth.
  • High case assumes larger revenue base removed.

Fiscal build-up, central case

  • Lower SDLT receipts: +GBP 8.5bn
  • Higher transactions offset: -GBP 1.0bn
  • Administration: +GBP 0.0bn
  • Administration and uncertainty: +GBP 0.0bn

Central net impact: +GBP 7.5bn in 2027-28.

Behaviour and pass-through

  • Low case assumes lower tax unlocks more transactions and mobility.
  • Central case assumes partial benefit is capitalised into prices.
  • High case assumes weak transaction offset and high-value relief leakage.
  • Productivity gains are not counted unless moves actually rise.

Phasing

  • 2026-27: +GBP 1.5bn. Preparation or partial implementation.
  • 2027-28: +GBP 7.5bn. Main scenario year.
  • 2028-29: +GBP 7.8bn. Behaviour and pass-through develop.
  • 2029-30: +GBP 8.0bn. Steady-state uncertainty persists.

Main source groups

  • S1: Reform Contract defines the SDLT schedule.
  • S2: HMRC ready-reckoners anchor SDLT rate changes.
  • S3: Tax-design literature cautions against transaction taxes.
  • S4: Devolved Scottish and Welsh systems are excluded.
  • S5: Housing-supply effects are not modelled.
  • S6: UK stamp-duty studies inform mobility, transaction-volume and timing assumptions.