Stamp Duty Land Tax changes in 2025 – what you need to know
As we step into 2025, significant changes to the Stamp Duty Land Tax (SDLT) are on the horizon, set to take effect from 1st April 2025. These changes will impact homebuyers across England and Northern Ireland, altering the financial landscape of property purchases. In this blog, we provide a detailed insight into how it might affect you.
Key changes to Stamp Duty Land Tax
Reduction in the Nil-Rate Threshold
The current nil-rate threshold of £250,000 will be reduced to £125,000. This means that buyers will now start paying stamp duty on properties valued above £125,000, rather than the previous £250,000.
First-Time buyers
The relief for first-time buyers will also see changes. Currently, first-time buyers pay no stamp duty on properties up to £425,000. From April 2025, this threshold will drop to £300,000. Additionally, the maximum purchase price for which first-time buyers can claim relief will decrease from £625,000 to £500,000.
New Rate Bands
The new SDLT rates will be as follows:
- Up to £125,000 – 0%
- £125,001 – £250,000 – 2%
- £250,001 – £925,000 – 5%
- £925,000 – £1.5 million – 10%
- Over £1.5 million – 12%
Additional properties
For buy-to-let and second home purchases, the surcharges will increase:
- Up to £125,000 – 5%
- £125,001 – £250,000 – 7%
- £250,001 – £925,000 – 10%
- £925,001 – £1.5 million – 15%
- Over £1.5 million – 17%
Impact on Homebuyers
- First-time buyers: The reduction in the nil-rate threshold for first-time buyers means that those purchasing homes valued between £300,000 and £425,000 will now face stamp duty costs they previously didn’t have to pay. For example, a first-time buyer purchasing a £400,000 home will now pay £5,000 in stamp duty, compared to zero under the current rates.
- Home movers: All homebuyers will need to budget for higher stamp duty costs due to the lower nil-rate threshold. For instance, purchasing a £300,000 home will incur a £3,500 stamp duty charge, whereas it currently incurs no charge.
- Investors and second home buyers: The increased surcharges for additional properties will make buy-to-let and second home investments more expensive. This could potentially cool the market for these types of properties, as investors may seek to complete transactions before the new rates take effect.
Preparing for the changes
- Budget carefully: Calculate the new SDLT costs when planning your property purchase to avoid any surprises.
- Plan ahead: If possible, consider timing your purchase to complete before April 2025 to take advantage of the current rates.
- Seek professional advice: Consult with property experts to understand how these changes specifically affect your situation.
- Stay informed: Keep track of any additional updates or amendments to the SDLT changes.
These significant changes represent a remarkable shift in the property tax landscape. By understanding and preparing for these adjustments, homebuyers can make informed decisions and navigate the property market more effectively.
How we can help
Buying or selling a home is often one of the largest purchases many of us will ever make. Our Conveyancing team at Osborne Morris & Morgan are experts in their field and have retained the Conveyancing Quality Scheme award – a best practice quality mark that clients can trust. Contact our expert team today on 01525 378177 or email info@ommlaw.co.uk.
