OBR-certified costing assumed ending temporary SDLT thresholds would raise revenue

The temporary stamp duty land tax thresholds introduced by Liz Truss expired on 31 March 2025, cutting the standard nil-rate band from £250,000 to £125,000, the first-time-buyer nil-rate band from £425,000 to £300,000, and the first-time buyer relief cap from £625,000 to £500,000¹. The Office for Budget Responsibility certified a costing that assumed ending the thresholds would raise revenue: £850m in 2025-26, £1.44bn in 2026-27 and £1.635bn in 2027-28¹.

The change added £2,500 of tax for most standard buyers above £250,000, according to the Tax Policy Associates analysis¹. For first-time buyers the effect was larger: a £425,000 first-time buyer went from zero SDLT to £6,250, and a £625,000 first-time buyer lost relief entirely and saw SDLT jump from £10,000 to £21,250¹.

The same analysis applied HMRC-calculated, OBR-used SDLT "semi-elasticities" to estimate the effect on transactions. It put the simple standard-buyer transaction drag at about 3.2%, with standard-buyer examples of -5.0% at £250,000, -4.2% at £300,000, -2.5% at £500,000, -1.7% at £750,000 and -1.3% at £1m¹. For first-time buyers it estimated 0% up to £300,000, about -7.4% at £425,000, -6.3% at £500,000 and -9.0% at £625,000, where relief was lost altogether¹.

In the twelve months before the forestalling period, February 2024 to January 2025, HMRC SDLT cash receipts were £13.1bn¹. The analysis states that HMRC cash SDLT receipts for 2025-26 were £15.159bn, £507m above the OBR's October 2024 forecast for total SDLT¹. It also states that the Housing select committee has said stamp duty does economic damage and should be reformed¹.

Why it matters for households

Anyone buying a home in England above the old thresholds pays more SDLT than they would have before 31 March 2025. The standard buyer above £250,000 pays £2,500 more¹. A first-time buyer at £425,000 moves from no SDLT to £6,250, and one at £625,000 from £10,000 to £21,250¹. The analysis estimates a long-run transaction drag of around 2.7% using OBR steady-state elasticities, or 2.6% on a more detailed cohort model, which on English transactions running at around a million a year is roughly 25,000 to 30,000 households who would otherwise have moved but will not¹. It also notes knock-on effects: fewer downsizing chains, older households in homes too big for them and younger families in homes too small, with around 40% of English households under-occupied and around 3% overcrowded¹. It estimates a loss of 30,000 transactions implies somewhere around £300m of gross moving-related spending lost¹. More on the costs of buying is in the home-buying hub.

What happens next

The OBR-certified costing assumed the change would raise £850m in 2025-26, £1.44bn in 2026-27 and £1.635bn in 2027-28¹. The analysis states that the first-year spike and its payback are a one-off effect, and that once they have washed through the underlying behavioural drag is likely to be smaller than the first-year numbers suggest¹. No further dated steps are set out in the material.