Stamp Duty Shake-up: What Homebuyers in England and Northern Ireland Need to Know From April 2025

Aspiring homeowners and those looking to move are being urged to factor in significant changes to Stamp Duty Land Tax (SDLT) set to take effect from April 1, 2025. These adjustments, which will impact a wide range of property purchases in England and Northern Ireland, will see a reduction in the tax-free threshold and modifications to relief for first-time buyers, potentially increasing the upfront cost of moving for many.

The upcoming changes will reverse the temporary thresholds that have been in place. For most residential property purchases, the nil-rate stamp duty threshold will be halved, dropping from £250,000 to £125,000. This means that more property transactions will be subject to the tax.

Key Changes for First-Time Buyers

First-time buyers, who have benefited from more generous tax relief, will also see a significant change. The 0% stamp duty threshold for this group will be reduced from the current £425,000 to £300,000. Furthermore, the maximum value of a property that can be purchased while still claiming first-time buyer relief will decrease from £625,000 to £500,000.

Under the new rules, first-time buyers will pay 5% SDLT on the portion of the property price between £300,001 and £500,000. For example, a first-time buyer purchasing a property for £400,000, who currently pays no stamp duty, will face a bill of £5,000 after April 1, 2025.

Impact on Home Movers and Additional Property Owners

The changes will also affect those who are moving home or purchasing additional properties. For standard residential purchases, the new stamp duty rates from April 1, 2025, will be as follows:

• 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%

Those purchasing second homes or buy-to-let properties will continue to pay a surcharge on top of the standard rates. These changes are expected to increase the upfront costs for a significant number of buyers and could lead to a surge in property transactions before the March 31, 2025, deadline as buyers rush to take advantage of the current lower rates.

It is important to note that these changes apply to residential property transactions in England and Northern Ireland. Wales and Scotland have their own separate land transaction taxes. Anyone in the process of buying a property is advised to speak with their solicitor or conveyancer about how these changes may affect them, as the new rates will apply to all completions on or after April 1, 2025.

After April 2025, 2% will be charged on the portion of the price from £125,001 to £250,000 (£2,500). A 5% rate will apply to the amount between £250,001 and £925,000 (£5,000). In total, this equals £7,500.

In Wales, no stamp duty is paid on the first £225,000 of a property. Rates are then 6% on £225,001 to £400,000, 7.5% on £400,001 to £750,000, 10% on £750,001 to £1.5 million, and 12% for amounts over £1.5 million.

Sources:

1. wbw.co.uk
2. hamptons.co.uk
3. coreco.co.uk