Rishi Sunak is said to be considering a six-week extension to the stamp duty holiday to prevent thousands of house sales from falling through.
The chancellor is mulling a time-limited extension to mid-May in a bid to ease fears that buyers could be caught in a “completion trap” as the current March 31 deadline looms, the Telegraph reported.
In July the government raised the stamp duty threshold from £125,000 to £500,000 in an effort to boost the economy and spur on the housing market.
The tax relief, alongside the easing of restrictions, helped house prices surge to record highs by the end of the year.
But the pandemic has also slowed the sales process and forced some buyers to wait months for the transaction to complete.
This has raised concerns that many could be left facing an unexpected tax bill when the stamp duty holiday ends.
“It is certainly the case that a lot of people would be caught in the completion trap if the holiday were to end when it is due to,” a source told the Telegraph.
Sunak is said to have rejected a longer extension, however, as he looks to claw back tax revenues lost due to a number of emergency measures during the pandemic.
An extension to the stamp duty holiday would come after the government this week said it will extend the Help to Buy equity loan scheme to the end of May.
The programme, which provides a 20 per cent loan to enable buyers to pay a smaller deposit of five per cent, was due to end in March.
The chancellor has insisted the UK must return to “sustainable” levels of government spending ahead of his Budget on 3 March.