As of 1st April 2025 property buyers will be subject to increased rates of Stamp Duty. In September 2022, the Government announced a temporary increase to the thresholds above which SDLT must be paid, on 31st March 2025 this comes to an end potentially adding thousands to your Stamp Duty bill. Whilst this change will impact everyone planning to move, first-time buyers will be the most affected.
Currently first-time buyers pay no stamp duty when buying a home worth up to £425,000. This threshold will drop to £300,000. For example, on a property purchase price of £424,000 a first time buyer will go from paying nothing to paying £6,200 stamp duty tax.
How can you beat the stamp duty changes?
To take advantage of the current stamp duty rates, and save yourself on average £6,250 as a first-time buyer and £2,500 as a home mover, you’ll need to have completed on your new property purchase by 1st April 2025. Whilst this date might seem quite far away, the average time to complete a house purchase in the UK is between 12 and 16 weeks and can take longer in certain circumstances. This means the latest you can start the mortgage conveyancing process will be before Christmas 2024!
Why is stamp duty changing?
In September 2022, the then Conservative Government announced a temporary change to stamp duty, lowering the upfront costs of moving home. The aim of this was to support the housing market, the jobs and businesses that rely on it, and those who were hoping to get on the housing ladder.
Whilst this measure was initially announced as a permanent change, at the Autumn Statement 2022, the government announced that the increase in the residential nil-rate threshold will end on 31 March 2025.
How is stamp duty changing?
From 1st April 2025, there will be several changes coming into effect:
- The nil rate threshold which is currently £250,000 will return to the previous level of £125,000.
- The nil rate threshold for first-time buyers which is currently £425,000 will return to the previous level of £300,000.
- The maximum purchase price for which First-Time Buyers Relief (a reduced stamp duty rate) can be claimed is currently £625,000 and will return to the previous level of £500,000.
The below table shows the current stamp duty rates for main residences in England:
| Proportion of property value | Rate for main residence | ||
|---|---|---|---|
| Up to £250,000 | 0% | ||
| £250,001 to £925,000 | 5% | ||
| £925,001 to £1.5 million | 10% | ||
| Over £1.5 million | 12% |
*The figures are based on a standard residential purchase of a freehold property, which is to be a main residence for an UK resident.
From 1st April 2025, the stamp duty rates will be:
| Proportion of property value | Rate for main residence | ||
|---|---|---|---|
| Up to £125,000 | 0% | ||
| £125,001 to £250,000 | 2% | ||
| £250,001 to £925,000 | 5% | ||
| £925,001 to £1.5 million | 10% | ||
| Over £1.5 million | 12% |
How will the stamp duty changes affect first-time buyers?
These stamp duty changes are likely to have the most impact on first-time buyers. By reducing the nil rate threshold by £125,000 and reducing the maximum purchase price for which first-time buyers’ relief can be claimed by the same amount, it could make it even harder for some first-time buyers to get onto the property ladder.
From 1st April 2025, first-time buyers won’t pay stamp duty on properties up to only £300,000, and they’ll only get first-time buyers’ relief on properties up to £500,000 (5% on properties £300,000 to £500,000).
Whereas, currently, if you’re a first-time buyer you don’t pay any tax on properties up to £425,000, and if the cost of the property you’re buying is up to £625,000 you’re also eligible for discounted rates (5% on properties from £425,001 to £625,000).
Current first-time buyer stamp duty rates:
| Proportion of property value | Rate for first-time buyers | ||
|---|---|---|---|
| Up to £425,000 | 0% | ||
| £425,001 to £625,000 | 5% |
For example, if you’re a first-time buyer looking to buy a £525,000 house in England, you’ll start paying SDLT at £425,000. Your total charge would be £5,000.
First-time buyer stamp duty rates from 1st April 2025:
| Proportion of property value | Rate for first-time buyers | ||
|---|---|---|---|
| Up to £300,000 | 0% | ||
| £300,001 to £500,000 | 5% |
For example, if you’re a first-time buyer looking to buy a £400,000 house in England, you’ll start paying SDLT at £300,000. Your total charge would be £5,000.
How will the stamp duty changes affect second home purchases?
As of 1st April 2025, there will be an extra band added into the stamp duty thresholds for additional property purchases, reflective of the general stamp duty changes.
The below table shows the current stamp duty rates for additional properties in England:
| Proportion of property value | Rate for additional property | ||
|---|---|---|---|
| Up to £250,000 | 5% | ||
| £250,001 to £925,000 | 10% | ||
| £925,001 to £1.5 million | 15% | ||
| Over £1.5 million | 17% |
From 1st April 2025, the stamp duty rates will be:
| Proportion of property value | Rate for additional property | ||
|---|---|---|---|
| Up to £125,000 | 5% | ||
| £125,001 to £250,000 | 7% | ||
| £250,001 to £925,000 | 10% | ||
| £925,001 to £1.5 million | 15% | ||
| Over £1.5 million | 17% |