Stamp duty cut for first time buyers

17:11 24 March 2010

Chancellor Alistair Darling has axed stamp duty on homes aimed at helping first-time buyers.

In the 2010 pre-election Budget, it was announced homes priced up to £250,000 will be stamp duty free – but only to first time buyers. 

However, those better off financially would pick up the deficit, with buyers choosing pricier homes left paying a higher stamp duty.

The two-year plan will cost the Treasury £230m in 2010-11 and £290m in 2011-12, funded by the introduction of a new higher stamp duty to 5%  on properties costing more than £1m from April next year.

For savers, it was good news as annual limits on Individual Savings Accounts (ISAs) are set to rise from £7,200 to £10,200 next month.

Also unveiled was a series of measures aimed at clawing back tax from higher earners.

The inheritance tax threshold will be frozen for another four years, in order to help pay for the costs of caring for older people.

Furthermore, the chancellor announced the end of some personal tax allowances on those earning more than £150,000 and a cut in tax relief on pensions for those with incomes above £130,000 a year.

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Chancellor Darling said the budget deficit was now expected to be £167bn this year rather than the £178bn forecast.

To ease the increase of fuel duty for the public, the 3p rise is to be phased in between April and January next year in three stages, rather than in one go – with the tax rising by a 1p in April with another penny in October and the final instalment of 0.76p in January next year.

Wine, beer and spirit duties will rise by 2% from midnight on Sunday, and further 2% rise is planned for two years from 2013. Cider duty is also set to rise by 10% above inflation from March 28.

For smokers, tobacco duty will rise by 1% immediately, then by 2% in real terms each year until 2014.

However, there was help for the young and old in the job market. The scheme to aid under 24s, guaranteeing them six months in work or training, was extended for another two years.

The amount of time over-65s must work to receive credits was reduced as well.

Parents of one and two-year-old children will also get an increase of £4 a week in child tax credits from 2012.

Money has been set aside for road repairs, desperately needed in many places after the big freeze caused widespread damage. £100m has been allocated to help local roads and £285m for improvements to motorways.

The chancellor revealed that the impact of the economic crisis has meant the UK economy has shrunk by about 6% over the recession. The estimated growth for 2011 was reduced to between 3% and 3.5%, but the report maintained that the predicted growth of 1-1.25% in 2010 was in line with forecasts.