The Chancellor said he was doubling the stamp duty threshold to £250,000, but only for first-time buyers, saving them up to £2,500.

To fund this he said he would bring in a new 5% band above £1m – introducing a bill of at least £50,000.

But the removal of stamp duty up to £250,000 will be a temporary relief only for first-time buyers.

Mr Darling said the removal of stamp duty up to £250,000 would be in place for at least the next two years and come in immediately.

The £1m threshold will come in from the 2011/2012 tax year.

However, only first-time buyers will see any benefit and the Treasury says this will exclude anyone who has ever owned a home in the UK before from applying for the exemption.

A Treasury spokesman said that first-time buyers would have to confirm this was their first property at the time of purchase and checks would be carried out.

Stamp duty is currently levied at 1% of the purchase price on properties worth between £125,000 and £250,000. All buyers who are not purchasing their first property will still pay this.

The £1m threshold for 5% tax will only apply to residential property.

Why stamp duty sums don't add up

Would a £250,000 stamp duty threshold help?

The Council of Mortgage Lenders said that if an across the board £250,000 starting threshold for stamp duty existed, around 92% of first-time buyers and 69% of home movers in 2009 would have been exempt from paying.

However, these figures do not represent the true burden of stamp duty on those in areas where house price inflation has spiralled and made buying a family home hardest.

Michael White, property partner at City law firm Dawsons LLP said: 'Ideally, the Government should scrap stamp duty altogether, but, at the very least, it should be reformed.

'The creation of a system based on regional variation in house prices would allow higher stamp duty thresholds in areas where house prices are higher. This would create a fairer system for the public and ones that help stimulate the property market all around the country.'

Opinion: Axing stamp duty below £250,000 is the wrong answer

Even with a £250,000 initial threshold for all, buyers of family homes, or first-time buyer properties, costing more than £250,000 will see their potential bill jump from nothing below the threshold to at least £7,500.

The previous system of charging 1% up to £250,000 and 3% on the full purchase price above this causes stamp duty bills to leap from £2,500 to £7,500 at the £250,000 threshold.

This step was introduced by Gordon Brown, as Chancellor. Before his time in charge of the nation's finances stamp duty was a flat rate of 1% above £60,000. This was changed to 1.5% above £250,000 in 1997 and 2% above £500,000 and then 3% above £250,000 and 4% above £500,000 in 2000.

Since then the higher thresholds have failed to keep pace with rampant house price inflation. Had they done so, the 3% band would start at £694,000 and the 4% band would start at £1,388,000, according to the Nationwide's house price figures.

The move by Mr Darling pre-empts any opportunity for the Conservatives to do the same. They have promised to exempt stamp duty on properties worth up to £250,000 since 2007, funded by a levy on non-domiciled foreigners who avoid tax on their offshore earnings.

A stamp duty 'holiday' on properties worth between £125,000 and £175,000 ended in January.

The above information has been taken from on the 13th April 2010.

















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