Financial Times FT.com

Brown considers stamp duty freeze

By Jean Eaglesham, Chief Political Correspondent

Published: August 5 2008 11:24 | Last updated: August 5 2008 20:32

The postponement of stamp duty and a tax-free savings account to help first-time buyers are among measures being considered by Gordon Brown as part of a package of economic steps designed to rescue his premiership next month.

The government on Tuesday pledged to announce measures to “help people with housing” and fuel bills in the autumn, while admitting it had yet to work out exactly what those policies were.

The Treasury is costing options to defer stamp duty for lower value homes. But officials said reports the tax would be temporarily axed for all properties were wide of the mark. While the prime minister is desperately seeking ways to revive Labour’s dismal opinion poll ratings, the government cannot afford to lose the £6.5bn annual revenue generated from residential stamp duty.

Alistair Darling on Tuesday committed the government to announcing “further measures in the autumn to help people with housing”. The chancellor did not rule out changes to stamp duty, but emphasised: “We have not concluded what exactly we need to do.”

One element of the package is likely to be a new individual savings account, allowing first-time buyers a greater tax-free cash allowance to save towards a deposit.

The most likely change to stamp duty is a deferral of the 1 per cent stamp duty charged on properties of £125,000-£250,000, for an unspecified period of time. The Treasury wants to focus any concession on first-time buyers, echoing Conservative proposals last year to waive stamp duty for this group on properties up to £250,000. But officials admitted there was “no stamp duty proposal” as yet, stressing “all the options are on the table”.

The Liberal Democrats warned that a suspension of stamp duty could exacerbate problems in the housing market. “The government shouldn’t be trying to bribe people into buying houses in a falling market,” said Vince Cable, the Lib Dem treasury spokesman.

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