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The threshold for stamp duty land tax has been temporarily raised for one year.
The Chancellor of the Exchequer has revealed that there will be an exemption from SDLT for land transactions consisting entirely of residential property where the chargeable consideration is not more than £175,000.
The relief will apply to transactions with an effective date on or after 3 September 2008 and before 3 September 2009.
The announcement comes after weeks of speculation about a possible suspension of stamp duty as part of a Government strategy to revive the UK housing market and economy in general.
In early August, Alistair Darling refused to rule out the possibility that the tax would be temporarily withdrawn — and this led to a warning from accountancy provider Grant Thornton that such a move could result in the Treasury having to fund a tax shortfall of up to £7 billion.
George Bull, head of tax at Baker Tilly , was cynical about the interim change to SDLT rules, remarking that it seems like 'political headline-grabbing'.
'A quick look at the statistics suggests that only one in six properties sell for between £125,000 and £175,000, so only they will benefit,' he said.
'The one-year increase in the threshold will help those who would have purchased anyway, but is unlikely to be much of an incentive to others.'
The Liberal Democrats also criticised the Chancellor's announcement, with the party's leader, Nick Clegg, claiming it is a plan by Gordon Brown 'to save his job, not help people struggling with the credit crunch'.
Mr Clegg added: 'If the prime minister really wants to help people on low and middle incomes, he could take the simple and obvious step of cutting their taxes, releasing billions of pounds to boost the economy'.
