Stamp Duty Land Tax changes - residential properties
From 1 April 2025, the rates of Stamp Duty Land Tax are changing. Whilst this change will impact on every residential purchase completed on or after this date, it's first-time buyers who will be the most affected.
What is Stamp Duty Land Tax?
Stamp Duty Land Tax (SDLT) is a government tax which is paid by the buyer of a property on completion of the purchase.
The payment applies to the purchase price and is calculated according to the price brackets set by the Government.
The amount of SDLT liability depends on a range of factors which include (but are not limited to) whether a buyer is:
- A first-time buyer
- Purchasing a property as an individual or company
- Replacing a main residence
- Purchasing additional property
- A UK resident
Why are the current rates of SDLT changing?
In September 2022, the then Conservative Government announced a temporary change to SDLT rates. This change was intended to support the housing market and enable more people to get onto the housing ladder as well as reduce the costs of moving home.
This was initially announced as a permanent change, however in the Autumn Statement 2022, the Government announced that the increase in the changes to SDLT would end on 31 March 2025.
What are the current rates of SDLT?
The following table shows the current SDLT rates for residences* in England for both the standard rate (main residence) and higher rate (additional properties):
|
Property Value |
SDLT Rate for main residence (standard rate) |
SDLT Rate for additional property (higher rate) |
|
Up to £250,000 |
0% |
5% |
|
£250,001 to £925,000 |
5% |
10% |
|
£925,001 to £1.5 million |
10% |
15% |
|
Over £1.5 million |
12% |
17% |
*The figures are based on a residential purchase of a freehold property for an UK resident.
What changes come into effect on 1 April 2025?
From 1 April 2025, the nil rate threshold which is currently £250,000 will return to the previous level of £125,000.
From 1 April 2025, the stamp duty rates for main residences in England for both the standard rate and higher rate (additional properties) will be:
|
Property Value |
SDLT Rate for main residence (standard rate) |
SDLT Rate for additional property (higher rate) |
|
Up to £125,000 |
0% |
5% |
|
£125,001 to £250,000 |
2% |
7% |
|
£250,001 to £925,000 |
5% |
10% |
|
£925,001 to £1.5 million |
10% |
15% |
|
Over £1.5 million |
12% |
17% |
How will the stamp duty changes affect first-time buyers?
The stamp duty changes are likely to have the most impact on first-time buyers. This is because in addition to the changes in the SDLT rates, qualifying first time buyers can apply a first time buyer relief which has the effect of raising the nil rate threshold.
Under the current rules, a qualifying first-time buyer won't pay SDLT on properties up to the value of £425,000 and where the cost of the property is up to £625,000 they will also be eligible for discounted rates of SDLT.
From 1 April 2025, the nil rate threshold reduces to £300,000 and they will only be entitled to discounted rates of SDLT up to a property price of £500,000. This will undoubtedly make it even harder for some first-time buyers to get onto the property ladder.
The following show the SDLT rates for first-time buyers before and after 1 April 2025:
Pre-1 April 2025
|
Property Value |
SDLT Rate for First-Time Buyer |
|
Up to £425,000 |
0% |
|
£425,001 to £625,000 |
5% |
|
Over £625,000 first-time buyer relief cannot be claimed and the standard rates apply |
Post-1 April 2025
|
Property Value |
SDLT Rate First-Time Buyer |
|
Up to £300,000 |
0% |
|
£300,001 to £500,000 |
5% |
|
Over £500,000 first-time buyer relief cannot be claimed and the standard rates apply |
For example, if you’re a first-time buyer looking to buy a £500,000 house in England pre-1 April 2025, you’ll start paying SDLT at £425,000. Your total charge would be £3,750.
However, if you were to buy the same £500,000 house in England post-1 April 2025, you’ll start paying SDLT at £300,000 and your total charge would be £10,000.
How can I make sure I benefit from the current SDLT rates?
To take advantage of the current SDLT rates, you’ll need to have completed on your property purchase before 1 April 2025.
If you have not already exchanged contracts with a completion date before this timescale, you should make sure you are aware of the increase in the SDLT liability for your purchase - and include this within your budget.
To stay up to date with any future changes to the UK stamp duty charges visit the UK Government website.