From the 1st April 2025 Stamp Duty Land Tax (SDLT) rates will be changing. These updated rates have the potential to add increased costs onto your home move. If your property transaction completes after March 31, 2025, it is important to know how these Stamp Duty rate changes may affect you.
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What is Stamp Duty?
Stamp Duty Land Tax is a tax imposed by the government on the purchase of property or land in England and Northern Ireland.
If you are buying property in Wales or Scotland different rules apply. In Wales you would pay Land Transaction Tax and Scotland Land and Buildings Transaction Tax.
Stamp Duty is paid by the buyer upon completion of the transaction. The amount of tax you pay depends on several factors. These include if you are a first-time buyer, buying additional property, or replacing your main home.
In England, the current stamp duty rates for residential properties are structured as follows:
- Up to £250,000: 0%
- £250,001 to £925,000: 5%
- £925,001 to £1.5 million: 10%
- Above £1.5 million: 12%
For first-time buyers there is no SDLT up to £425,000 and 5% on the portion from £425,001 to £625,000.
If you are buying a property in addition to your main home, expect to pay an extra 5% in Stamp Duty. This is on top of the rates mentioned above.
However, these thresholds and rates are due to change in 2025. This is likely to increase the amount you will need to pay when buying property.
Stamp Duty changes coming in 2025
The UK government has announced a series of changes to the stamp duty system, which will take effect from April 1st 2025. From this date the Stamp Duty rates will be as below:
- Up to £125,00: 0%
- £125,001 to £250,000: 2%
- £250,001 to £925,000: 5%
- £925,001 to £1.5 million: 10%
- Above £1.5 million: 12%
The rates for first-time buyers are also changing. If you are buying your first property you can expect to pay 0% up to £300,000 and 5% on the portion from £300,001 and £500,000. If the property is over £500,000 you pay the same as someone who has bought property before.
How will these Stamp Duty changes affect homebuyers?
These changes are going to make buying property more expensive than the current rates.
The new Stamp Duty thresholds and rates may make it harder for first-time buyers to get on the property ladder and for current homeowners looking to move into a bigger home. This is especially true for those in expensive areas like London, where the average property costs over £300,000.
Should homebuyers act now or wait?
With the stamp duty changes starting in 2025, homebuyers might wonder if they should buy now or wait. No right answer exists to this, as it depends on individual circumstances. By completing before April 1, 2025, you will likely benefit from paying the current lower stamp duty costs.
If you are planning to move, it may be smart to act quickly. This is especially true if you live in an area where house prices are high or rising fast.
