The tax cut is one of several tax cuts rumoured to be unveiled by Kwarteng on Friday, with insiders reporting that Kwarteng and prime minister Liz Truss have been discussing the plans for several weeks.

The tax cut will aim to stimulate further growth in the property market. However, Downing Street has refused to comment on the rumours.

Other tax cuts in the pipeline include national insurance, inheritance tax, and VAT.

Plans to cut stamp duty have been widely criticised by experts and on social media, with many pointing out that the housing market is already overheated. The average house price went up 15.5% to £292,118 in July, according to the Office for National Statistics.

In 2020, then chancellor Rishi Sunak introduced a stamp duty holiday in an effort to cushion the property market from the impact of the pandemic. During the holiday, there was no stamp duty to pay on property purchases up to £500,000; the rate was then tapered to £250,000, before reverting to its normal level of £125,000 in October last year.

‘Pushing house prices higher’

The policy triggered increased activity in the property market, but critics said the tax break pushed up house prices, making it more difficult for first-time buyers to buy their first home. Many have pointed out that the UK needs more homes, rather than incentives to push up demand.

Lewis Shaw, founder of Shaw Financial Services, said: “There are many bad ideas in the political top 10 right now but cutting stamp duty is off the charts. This move will push house prices even higher, worsening inflation and further pricing first-time buyers out of homeownership.

“Put it this way, if someone asked me how to drive an already overheated property market into dangerous bubble territory and make things worse for everyone, this policy would be it. It’s bovine short-termism at its worst.”

Graham Taylor, managing director of mortgage broker Hudson Rose, said: “Cutting stamp duty will appeal to the Tory faithful but ultimately won’t massively benefit those trying to get on the housing ladder.

“With too few properties on the market already, this move will likely push prices even further out of reach for the aspiring first-time buyer. More affordable homes is the best way to underpin and strengthen the market but this seems to be something successive governments are unwilling to invest in.”