Stamp Duty is changing in April 2025

Time is quickly slipping away for prospective homebuyers eager to secure their dream properties before significant changes to stamp duty take effect on April 1, 2025. These new regulations could add thousands of pounds to the overall cost of moving, creating a heavy burden, especially for first-time buyers navigating the complexities of the property market.

Given that the process of purchasing a home can stretch from a matter of weeks to several months, the urgency for house hunters to act swiftly has never been greater. With the deadline looming, now is the critical moment to seize the opportunity and embrace the journey toward home ownership. price of moving, especially for first-time buyers. However, as property purchases can take anything from a few weeks to many months to complete, the clock is ticking on house hunters.

Why is stamp duty changing?

A stamp duty discount that was introduced by the previous government in 2022 has been in effect, but the current government has not announced plans to continue it. As a result, anyone purchasing a home will soon face a different stamp duty rate.

Starting on 1 April, first-time buyers in England and Northern Ireland will pay no stamp duty on the first £300,000 of their purchase, which is a reduction from the previous threshold of £425,000. For those buying a home that is not their first, only the first £125,000 will be exempt from duty, down from £250,000.

What is stamp duty?

Stamp Duty Land Tax (SDLT) is a tax levied on property purchases in England and Northern Ireland, calculated based on the sale price of the property. It is important to note that different tax systems are in place in Wales, known as the Land Transaction Tax, and in Scotland, termed the Land and Buildings Transaction Tax.

In England and Northern Ireland, SDLT operates on a tiered structure, meaning that the tax rate increases with the property sale price. Each segment of the property's value is subject to a specific percentage rate. For example, as of now, there is no SDLT for properties priced up to £425,000. For properties costing from £425,001 to £625,000, a tax rate of 5% is applied to the amount exceeding £425,000.

First-time buyers are entitled to a significant financial benefit through SDLT relief. To qualify for this relief, the property must be the first residential home purchased by you or anyone you are jointly purchasing with. Additionally, the total purchase price must not exceed £625,000. This initiative aims to assist new buyers in entering the housing market, making homeownership more accessible and affordable for those embarking on this significant investment for the first time.

The full breakdown of the current SDLT bands are:

• 0% up to £250,000

• 5% on the portion from £250,001 to £925,000

• 10% on the portion from £925,001 to £1.5 million

• 12% on any remaining portion

  
  

If, after purchasing the property, it is not your only residential property, you will be required to pay an additional 5% on top of the standard rates. In some cases, this fee may be refunded if you sell your previous main home within three years.

What will change when the stamp duty holiday ends in April 2025?

From 1 April 2025, the thresholds at which people start paying stamp duty will revert back to the levels set before temporary changes were introduced in 2022.

The changes will mean from 1 April 2025, stamp duty is charged at the following rate:

How will the stamp duty changes affect first-time buyers?

The alterations in stamp duty are expected to affect first-time buyers significantly.

By lowering the nil rate threshold by £125,000 and decreasing the maximum purchase price eligible for first-time buyers' relief by the same figure, it may become more challenging for some first-time buyers to enter the property market.

Starting from 1st April 2025, first-time buyers will not pay stamp duty on properties valued up to £300,000. They will receive first-time buyers’ relief on properties priced up to £500,000, with a 5% rate applied to properties between £300,000 and £500,000.

Currently, first-time buyers do not pay any tax on properties up to £425,000. If the property costs up to £625,000, they are eligible for discounted rates, with a 5% rate on properties priced from £425,001 to £625,000.

Current first-time buyer stamp rates (pre-April 2025):

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 rate changes from April 2025

First-time buyers will still receive a discounted rate, but the relief will be reduced to 0% up to £300,000 and 5% on the portion from £300,001 to £500,000. You cannot claim the relief if the price is over £500,000.

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