Stamp duty will rise for first-time buyers next year if Labour wins the election, the party has confirmed, as it plans to allow a temporary tax break enacted by the Conservatives to expire.
A party spokesperson said on Friday it would allow the threshold for stamp duty to fall back to £300,000, after it was raised to £425,000 in 2022 by Rishi Sunak, the then chancellor.
The clarification came after Keir Starmer appeared to announce the end of another tax break during a phone-in on BBC Radio 5 Live.
In 2022, Sunak said the higher threshold would last until April 2025, but he has since committed to making it permanent if he wins the election, at a cost of nearly £600m a year by the end of the parliament.
Labour has not made the same commitment, accusing the Conservatives of making unfunded promises, and the party confirmed on Friday it would allow the tax break to expire.
During the radio phone-in, Starmer told a caller he intended to scrap the rule that allowed people to withdraw 25% of their pension as a lump sum without paying any tax on it. “It runs out in a number of years, and we’re not going to renew it,” he said.
However, party officials clarified that the 25% tax relief did not have an expiry date, and that Starmer had meant to talk about temporary relief such as the rise in stamp duty for first-time buyers.
A spokesperson said: “The ability to withdraw 25% of your pension as tax free lump sum is a permanent feature of the tax system and Labour are not planning to change this.
“Keir was referring to temporary tax breaks in the system that are due to expire and which the public finances assume will not continue, like increasing the stamp duty threshold for first-time buyers from £300,000 to £425,000.”
Starmer has spent much of the election campaign justifying his financial plans, having promised no return to austerity without being able to say how he would pay for increased departmental spending.
Economists at the Resolution Foundation warned this month that the next government faced a £33bn hole in the public finances, saying there would need to be sharp spending cuts or tax rises to fill it.
The Institute for Fiscal Studies has accused both main parties of a “conspiracy of silence” over the tough economic choices they would have to make if they win next week’s election.
Starmer has promised not to raise income tax, national insurance or VAT, but has left open the possibility of raising other, smaller taxes. The Guardian revealed last week the party was drawing up plans to raise capital gains tax and inheritance tax during a budget that could come in early October.
Starmer has insisted that Labour’s plans add up without extra taxes, saying that economists are failing to take account of higher growth which he says would follow a Labour victory. The party is planning to invest more in green energy and liberalise the planning regime in an effort to boost the UK’s economic output.
The Labour leader said on Friday: “Many of the assumptions that have been made by the IFS and others are on the basis that growth will stay broadly where it is now. I don’t accept that. I think we can start on growth straight away.”
