Starting from April 1st 2025, changes to Stamp Duty Land Tax (SDLT) will take effect, with the Government lowering thresholds determining when and how much tax is payable. Ultimately, this means more buyers will face higher Stamp Duty costs when purchasing a property. In this article, we explain everything you need to know about the changes and how they could impact you when buying a property from April onwards.
What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is a tax that is paid by the buyer when buying a new property. The amount due varies based on several factors, including:
- Whether you are a first time buyer
- If you are replacing your main residence
- Purchasing an additional property
- The property's purchase price
Why are Stamp Duty charges changing?
Until the end of March 2025, SDLT was operating at a reduced rate to help improve the property market. The changes to Stamp Duty form part of the Government's strategies to increase tax revenues; reducing the threshold for when Stamp Duty will apply will result in more buyers paying an increase in SDLT and boosting tax revenue for the Government.
Up until the 31st March 2025, the threshold of when SDLT applies was as follows:
- When purchasing a new main residence – if the property was over £250,000
- First time buyer – if the property was over £425,000
- Purchasing additional properties – if the property was over £39,999
What are the Stamp Duty changes for purchasing a property that will be my main residence?
The Government has significantly dropped the threshold of when SDLT applies, resulting in much higher payments for those purchasing a property. If you are buying a new home that will be your only property, from 1st April 2025 the following rates will apply:
- Property value up to £125,000 - 0% SDLT
- Property value from £125,001 to £250,000 - 2% SDLT
- Property value from £250,001 to £925,000 - 5% SDLT
- Property value from £925,001 to £1.5 million - 10% SDLT
- Property value above £1.5 million - 12% SDLT
What are the Stamp Duty changes on a property that is an additional property?
If you are buying an additional property to your main residence then a higher rate of SDLT is charged, as a surcharge is added on top of the standard rates listed above. On October 31st 2024, this surcharge increased from 3% to 5%. While there are no further increases from April 1st 2025, the changes to the SDLT thresholds for main residence purchases will have a significant impact on SDLT charged.
If you have not sold your main residence on the day you complete on your new home, then these additional charges can apply. If you sell the property within 36 months of completing on your new property then you can apply to have the higher rates refunded.
What are the Stamp Duty changes for first time buyers?
As a first time buyer, there will still be some 'relief' on the Stamp Duty costs; while the threshold of when it applies will be lowered as it is for everyone, it is still not as high as those who already own a property. From 1st April 2025, the SDLT charges are as follows:
- No SDLT is charged if the property is less than £300,000.
- If the property costs between £300,001 to £500,000 - 5% SDLT applies on the amount over £300,000.
- If the price of the property is over £500,000 - the 'relief' no longer applies and you will pay the same SDLT as someone buying a new main residence.
When is Stamp Duty paid?
Stamp Duty Land Tax should be paid within 14 days of completion of your property. If we are acting as your Solicitor in the purchase of your property, we will handle the return and ensure payment is made on your behalf. The SDLT charge will be included in your final invoice and collected before completion.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
