Abolish stamp duty on main homes: calculation note

Central fiscal result

+£9.0bn - Net fiscal impact in 2028-29

Low case: +£6.5bn. High case: +£12.5bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Model abolition of main-home residential SDLT by 2028-29.
• Second homes and corporate buyers are not changed centrally.
• Baseline uses HMRC SDLT ready reckoners and OBR receipts forecasts.
• Central cost is £9bn before any replacement tax.

Affected population

• Affected population is main-home buyers and sellers in the UK SDLT system.
• Direct gains accrue to transacting households, not sitting homeowners.
• Indirect exposure includes estate agents, conveyancers, builders and lenders.
• Regional effects vary with house prices and transaction volumes.

Gross impact

• HMRC rate ready reckoners are scaled to main-home SDLT receipts.
• Central cost: £9bn after allowing for higher transactions.
• Low case assumes strong transaction response recovers some receipts.
• High case assumes price effects and transactions increase taxable bases elsewhere only modestly.

Fiscal build-up, central case

• Lost SDLT receipts: +£9.8bn
• Extra VAT and income-tax receipts: -£0.4bn
• Higher transaction-related receipts: -£0.3bn
• Administration and anti-avoidance: -£0.1bn

Central net impact: +£9.0bn in 2028-29.

Behaviour and pass-through

• Low case assumes more transactions and some offsetting receipts.
• Central case assumes moderate behavioural recovery of revenue.
• High case assumes weak offsets and higher house-price capitalisation.
• Housing supply constraints increase price capture by sellers.
• No broad GDP dividend is booked as fiscal saving.

Phasing

• 2026-27: +£1.8bn. Preparation or partial implementation.
• 2027-28: +£7.2bn. Main ramp-up year.
• 2028-29: +£9.0bn. Target-year central estimate.
• 2029-30: +£9.5bn. Continuation at steady-state assumptions.

Main source groups

• Conservative Party, "Kemi Badenoch closes Conservative Party Conference" (2025): Used to define the pledge wording, policy scope and implementation scenario being modelled.
• HM Revenue and Customs, "Direct effects of illustrative tax changes bulletin" (2025): HMRC provides direct-effect estimates for illustrative changes to SDLT, VAT, fuel duties and other taxes; anchors tax costs before behavioural and macro adjustments.
• Office for Budget Responsibility, "Economic and fiscal outlook: March 2026" (2026): The OBR forecast sets the macro, borrowing and receipts baseline used for broad fiscal context; prevents treating tax cuts or spending changes as self-financing.
• Best and Kleven, "Housing Market Responses to Transaction Taxes" (Review of Economic Studies, 2018): UK stamp-duty notches distorted transactions; temporary cuts raised activity but partly brought forward purchases; supports mobility gains but warns against treating receipts losses as self-financing.
• Hilber and Lyytikainen, "Transfer Taxes and Household Mobility" (Journal of Urban Economics, 2017): Higher housing transaction taxes reduced household mobility, especially among short-distance movers; directly relevant to abolishing stamp duty on main homes.
• Poterba, "Tax Subsidies to Owner-Occupied Housing" (NBER, 1989): Tax subsidies to owner-occupied housing can raise demand and house prices; relevant to tax cuts favouring home buyers.
• Conservative Party, "Our Plan for Britain" (2026): Used to define the pledge wording, policy scope and implementation scenario being modelled.