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If you’re planning to buy a property in the UK, you need to be aware of the upcoming changes to Stamp Duty Land Tax (SDLT), set to take effect from April 1st, 2025. These changes could have a significant impact on the amount you pay, particularly if you’re a first-time buyer, a home mover, or purchasing an additional property.
In this article, we’ll cover:
👉 What Stamp Duty Land Tax is
👉 Who pays it and who is exempt
👉 The changes coming in April 2025
👉 How Stamp Duty is calculated
👉 How much more (or less) you could pay under the new rules
👉 Changes for second-home buyers and investors
👉 Examples of how the new rates affect different price bandings
🔷 What is Stamp Duty Land Tax (SDLT)?
Stamp Duty Land Tax (SDLT) is a tax paid when purchasing property or land in England and Northern Ireland. The amount you owe depends on the purchase price of the property and whether you’re a first-time buyer, home mover, or buying additional properties.
🔷 Who Pays Stamp Duty Land Tax?
SDLT is payable by anyone buying a property over a certain price threshold. It applies to:
👉 First-time buyers (though they benefit from reduced rates)
👉 Home movers upgrading or downsizing
👉 Buy-to-let landlords and investors
👉 Anyone purchasing a second home or holiday home
👉 Companies purchasing property
🔷 Who is Currently Exempt from SDLT?
You won’t pay Stamp Duty currently if:
👉 You are a first-time buyer purchasing a home under £425,000.
👉 You buy a property below the minimum SDLT threshold (£250,000 for home movers, £425,000 for first-time buyers).
👉 The property is transferred due to divorce or separation.
👉 The property is left to you in a will.
👉 You purchase a shared ownership property, where different SDLT rules apply.
🔷 What Changes Are Coming in April 2025?
From April 1st, 2025, SDLT thresholds and rates will change. The temporary SDLT reductions introduced in September 2022 will come to an end, meaning homebuyers could face higher tax bills.
🚫 Current SDLT Rates (Until March 31st, 2025)
| Property Price | Standard SDLT Rate |
|---|---|
| Up to £250,000 | 0% |
| £250,001 – £925,000 | 5% |
| £925,001 – £1.5m | 10% |
| Over £1.5m | 12% |
🔺First-time buyers currently pay 0% up to £425,000 and 5% on the portion between £425,001 and £625,000.
✅ New SDLT Rates from April 1st, 2025
| Property Price | New SDLT Rate |
|---|---|
| Up to £125,000 | 0% |
| £125,001 – £250,000 | 2% |
| £250,001 – £925,000 | 5% |
| £925,001 – £1.5m | 10% |
| Over £1.5m | 12% |
🔺 First-time buyer relief will also be reduced, with 0% only applying up to £300,000 instead of £425,000.
🔷 How is Stamp Duty Calculated?
One common misconception about Stamp Duty Land Tax (SDLT) is that you pay the same percentage on the entire property price based on the highest tax band it falls into. However, SDLT is calculated progressively, meaning you only pay the higher rate on the portion of the property price that falls within each tax band.
For example, if you buy a property for £500,000 under the new rates from April 1st, 2025, your SDLT will be calculated as follows:
👉 0% on the first £125,000 = £0
👉 2% on the portion between £125,001 – £250,000 = £2,500
👉 5% on the portion between £250,001 – £500,000 = £12,500
Total SDLT payable: £15,000
This tiered approach ensures that buyers only pay higher rates on the portion of the property price that exceeds each threshold, rather than on the entire amount.
🔷 When is SDLT Payable?
SDLT becomes legally due on the completion date, which is when the buyer takes possession of the property and the funds are transferred.
You have 14 days from the date of completion to file an SDLT return and pay the tax to HMRC.
👉 What If You Exchange Before April 1st, 2025, but Complete After?
If you exchange contracts before April 1st, 2025, but complete the purchase on or after April 1st, 2025, you will be subject to the new SDLT rates, not the previous ones. The tax liability is based on the completion date, so even if you exchanged under the old rates, the new rates will apply if completion happens after the deadline.
👉 Are There Any Exceptions?
If a contract is substantially performed before completion (e.g., the buyer takes possession of the property before the formal completion date), SDLT might become due at that earlier point.
If you’re buying off-plan or under specific contractual terms, there may be different SDLT implications.
🔷 How Much More Will Buyers Pay?
Let’s look at some examples of how these changes affect buyers.
1️⃣ Example 1: Buying a £300,000 home as a home mover
Before April 1st, 2025: Stamp Duty = £2,500
After April 1st, 2025: Stamp Duty = £3,500
📌 Difference: +£1,000 increase
2️⃣ Example 2: First-time buyer purchasing a £400,000 property
Before April 1st, 2025: Stamp Duty = £0
After April 1st, 2025: Stamp Duty = £5,000
📌 Difference: +£5,000 increase for first-time buyers purchasing between £300,000 – £425,000
3️⃣Example 3: Home mover buying a £500,000 home
Before April 1st, 2025: Stamp Duty = £12,500
After April 1st, 2025: Stamp Duty = £13,750
📌 Difference: +£1,250 increase
🔷 What About Second Homes and Buy-to-Let Purchases?
If you’re buying an additional property (such as a second home or buy-to-let), you already pay a 5% surcharge on top of the standard SDLT rates.
From April 1st, 2025, this surcharge will still apply, but because the base rates are increasing, second-home buyers will see even higher costs.
1️⃣ Example 1: Buying a £300,000 Second Home
Before April 1st, 2025: SDLT = £14,500
After April 1st, 2025: SDLT = £19,500
📌 Increase: +£5,000
2️⃣ Example 2: Buying a £600,000 Buy-to-Let Property
Before April 1st, 2025: SDLT = £41,750
After April 1st, 2025: SDLT = £46,750
📌 Increase: +£5,000
🔷 What This Means for Homebuyers
👉 First-time buyers can still benefit from the current reduced thresholds before April 1st, making it a great opportunity to take that first step onto the property ladder.
👉 Home movers looking to upsize or relocate can make the most of today’s rates by acting now, ensuring a smoother and more cost-effective move before the deadline.
👉 Buy-to-let investors and second-home buyers who are planning to expand their portfolios should consider securing their next property before the changes, maximizing potential returns while demand remains strong.
🔷Final Thoughts
While tax adjustments are a natural part of the property cycle, the market remains active and full of opportunities. The key is to stay informed, plan ahead, and make confident decisions.
If you’d like tailored advice or help with finding your next home, Hannells is here to help! Get in touch with our team today to discuss your options and how these changes might affect you.
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