Cut stamp duty below £750,000: calculation note

Central fiscal result

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

Low case: +£4.0bn. High case: +£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 £750,000.
• Rates above £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 £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: +£8.5bn
• Higher transactions offset: -£1.0bn
• Administration: +£0.0bn
• Administration and uncertainty: +£0.0bn

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

Main source groups

• HM Revenue and Customs, "Direct effects of illustrative tax changes" (2026): HMRC ready-reckoners show large revenue effects from income-tax, NI, VAT, fuel-duty and corporation-tax changes; primary fiscal scale anchor.
• Reform UK, "Our Contract with You" (2024): The Contract specifies thresholds, duties and business-tax proposals while claiming annual cost and saving totals; defines broad current tax pledges.
• Best and Kleven, "Housing Market Responses to Transaction Taxes: Evidence From Notches and Stimulus in the UK" (Review of Economic Studies, 2018): UK transaction taxes distorted prices, timing and transaction volumes; temporary cuts raised activity in the short run; directly relevant to the housing-market response to a stamp-duty cut.
• Hilber and Lyytikainen, "Transfer Taxes and Household Mobility: Distortion on the Housing or Labor Market?" (Journal of Urban Economics, 2017): Higher transfer taxes reduced short-distance and housing-related moves, with weaker effects on job-related moves; supports mobility gains, but not a simple GDP uplift.
• Reform UK, "Our Policies" (2026): Used to define the pledge wording, policy scope and implementation scenario being modelled.