Stamp Duty is under the spotlight ahead of November 26th's Autumn Budget 2025, after Tory leader Kemi Badenoch said a Conservative government would abolish the tax on main home purchases.
Stamp duty, the 'bad tax' according to Badenoch
Aside from its potential impact on contractors, which I'll come to, Badenoch's pledge to axe the "bad tax" coincides with new figures from Rightmove revealing that only a small proportion of home buyers are exempt from stamp duty, writes Freelancer Financials CEO John Yerou.
According to the Rightmove data, just 5% of home movers and 40% of first-time buyers in England aren't required to pay stamp duty.
Who pays stamp duty?
Under current rules, homebuyers in England and Northern Ireland pay stamp duty on properties priced above £125,000, with rates starting at 2% and rising to 12% on homes over £1.5 million.
First-time buyers are exempt from stamp duty up to £300,000.
But despite this generous-sounding exemption, stamp duty still generated a significant £11.6 billion in revenue last year.
Stamp duty has largely stopped 800,000 people from moving home
Before Badenoch's stamp duty pledge on October 8th 2025, the HomeOwners Alliance highlighted that over 800,000 people have delayed moving in the past two years — with stamp duty costs being a primary deterrent.
The alliance argues that scrapping stamp duty would unlock housing supply, boost market activity, and stimulate economic mobility.
What about stamp duty thresholds?
Individual property and mortgage industry experts don't necessarily disagree. They have urged the government to reassess stamp duty thresholds, branding the tax a 'significant barrier' to moving home.
However, at the party's annual conference in Manchester, Badenoch said lowering the threshold at which stamp duty is paid would not be "enough" for the Conservatives if they were returned to power.
What else did Badenoch actually say about stamp duty?
The Tory leader acknowledged that the last Conservative government lowered stamp duty "for thousands of homebuyers."
But she then called stamp duty an "unconservative tax," accusing it of "suffocating social mobility" in the UK.
Broadly, Badenoch's pledge has been welcomed by housing professionals and think-tanks alike.
But it has also been met with a fair amount of scepticism from political commentators.
Stamp duty — in a nutshell — including as a contractor
As a contractor mortgage broker, we'd describe stamp duty as a significant financial hurdle when purchasing a home in England or Northern Ireland.
Typically, stamp duty adds thousands of pounds to the overall cost for our contractor clients.
And all other house purchasers too (except for those who are exempt of course)!
What do stamp duty critics say?
- Stamp duty discourages moving, including upsizing and downsizing.
- Stamp duty reduces housing turnover.
- Stamp duty drives up rents, as landlords pass the cost to tenants.
- Stamp duty inhibits economic mobility, especially for individuals needing to relocate for their work or jobs.
Supporters of Badenoch's pledge to axe stamp duty say it would:
- Make it easier and cheaper to move
- Help free up larger homes for growing families
- Improve mobility and flexibility in the labour market
- Stimulate the housing market and wider economy
Can the UK afford to scrap stamp duty?
While many individuals, ranging from property advisers to limited company contractors, might support the move, the feasibility of abolishing a tax that brings in over £11 billion annually to HM Treasury is being questioned.
There's widespread scepticism about whether the Conservatives — or any political party — can afford to implement such a big change to property taxation, given the UK's current fiscal pressures.
In short:
- Stamp duty is a key revenue source for the Treasury.
- Abolishing it would create a significant funding shortfall unless replaced.
- Some experts propose reforming Council Tax (still based on 1991 property values) as a more equitable alternative — though council tax reform would be politically risky.
What does the government say about stamp duty and property taxes?
Chancellor Rachel Reeves has been informally invited by Ms Badenoch to 'steal her idea,' and unveil the abolishment of stamp duty at next month's Autumn Budget 2025.
But Ms Reeves is reportedly grappling with a £47 billion fiscal gap, making press reports credible that — incoming to the property industry (which is where we specialise) — Labour is considering several alternatives.
Labour's property taxation ideas look likelier at Autumn Budget 2025
So as we fast-approach Autumn Budget 2025, Labour's mooted ideas to raise revenue in and around the UK housing market include:
- A new home sales tax on properties over £500,000.
- Applying National Insurance to rental income, with the aim of raising an estimated £2 billion.
- Introducing an annual property levy to replace council tax — though (at the time of writing) this is still under review.
It seems more likely that one or some of the above ideas from Labour will feature in next month's budget than Badenoch's stamp duty axe.
Not only would it be politically dangerous for Reeves to copy it, but practically speaking, details about Stamp Duty Land Tax (SDLT) reform are also scant. In fact, so far, the Conservatives have not released any detailed proposal on its leader's specific pledge to cancel stamp duty.
Stamp Duty: should it stay or should it go?
Stamp Duty is increasingly seen as an unfair and outdated tax that penalises those looking to move — whether to upsize, downsize, or relocate for work.
It also discourages older homeowners from moving out of large, under-occupied homes.
As far as contractors are concerned, irrespective of their employment, whether it's through a PAYE umbrella company or their own personal service company, stamp duty affects all such individuals in the same manner.
Badenoch/Reeves on stamp duty: my take as a contractor mortgage expert
As to what contractors can expect to see announced on November 26th, temporary cuts in stamp duty have historically led to increased market activity.
Even a modest increase in the stamp duty thresholds would provide much-needed relief for home buyers. Would a stamp duty threshold tweak be a politically acceptable halfway house for Reeves to occupy, a little over six weeks from now?
If the chancellor doesn't act, while the idea of abolishing stamp duty will remain popular, including among contractors, the political and economic reality means it may remain more of a campaign promise than a concrete policy — at least for now.
