Stamp duty, a tax on house purchases, will be cut to help families to afford to buy homes, British finance minister Kwasi Kwarteng said, with threshold at which it is first paid doubling to 250,000 pounds ($280,000) for home movers.
The nil-band threshold for first-time buyers will also increase to 425,000 from 300,000 pounds, he told lawmakers on Friday, adding that the changes are permanent and effective immediately.
"The steps we've taken today mean 200,000 more people will be taken out of paying stamp duty altogether," he said in a tax-cutting mini-budget designed to spur economic growth.
Stamp duty, payable in England and Northern Ireland, is a graduated tax, which rises in steps to 12% on the portion of the property price above 1.5 million pounds.
There was a stamp duty holiday during the COVID-19 pandemic, which initially increased the nil band to 500,000 pounds, stimulating a market which rose to record levels.
Shares in builders rose after the cuts were announced, with the UK's housebuilders' index up around 2%.
The likely announcement of reductions in the tax had been reported in the media, prompting broker Investec to say on Wednesday that cuts would support the housing market, but rising interest rates, the cost-of-living crisis and fears of higher unemployment would remain dominant.
($1 = 0.8937 pounds) (Reporting by Paul Sandle, David Milliken and Kylie MacLellan; editing by Alistair Smout)