Homebuyers are at risk of being hit by a £2,500 tax rise "overnight" when purchasing a new property, according to new analysis.
Coventry Building Society is calling for an overhaul of stamp duty which is a levy charged when someone buys a new home.
Based on the latest HM Revenue and Customs (HMRC) figures, those purchasing property in the UK paid a staggering £1.2billion in Stamp Duty in July.
In 2024 so far, homebuyers have paid £6.6billion in stamp duty to the tax man which is £100million more than over the same period last year.
As it stands, Britons currently pay stamp duty in England and Northern Ireland if their home costs more than £250,000.
However, the threshold at which someone will have to pay this tax will be halved to £125,000 in March 2025.
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Homebuyers are looking for ways to avoid stamp duty
GETTYWhen this threshold is cut, the tax bill on an average-priced home in England will jump from £2,768 to £5,268.
It should be noted that first time homebuyers currently pay stamp duty if their home costs more than £425,000.
However, even this threshold will be lowered to £300,000 in March 2025.
Furthermore, taxpayers also need to contend with an additional three per cent surcharge for anyone buying an additional property.
Jonathan Stinton, the head of Mortgage Relations at Coventry Building Society, warned that these pending cuts will pull more Britons into paying stamp duty.
He explained: "The Treasury is taking in huge sums of property taxes while homebuyers are racking up the debt.
"A stamp duty bill can be thousands of pounds so if people don’t have that amount lying around they’ll probably need to borrow more to cover the tax on their home.
"In seven months’ time the scale is set to tip even more in the Treasury’s favour, with the nil rate band set to halve to £125,000."
According to Stinton, Reeves should put forward changes to stamp duty as part of its upcoming Autumn Budget.
The property expert urged the Government should insure the average priced home does not go up by £2,500 "overnight".
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Chancellor Rachel Reeves is being called to reform stamp duty
PA"Short term pain for the Chancellor could result in longer term gain for the broader economy," Stinton added.
"Reducing the burden on homebuyers doesn’t have to be too costly for the Treasury either –the Stamp Duty holiday in 2020 and 2021 proved that homebuyers can get a break and tax revenue can remain healthy.
"It may even benefit the economy as people could spend the extra cash on improving their new home, boosting the retail and services sectors and returning some tax revenue through VAT.”
Chancellor Rachel Reeves will unveil the new Labour Government's fiscal agenda during the Autumn Budget on October 30.
