Time is running out for homebuyers to complete their purchases before stamp duty changes take effect on 1 April 2025. The new rules could add thousands to the 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 has been in place since it was introduced by the previous government back in 2022, but the current government has not announced that it will continue. This means that anyone buying a home will soon have to pay a different rate of stamp duty.
From 1 April, first-time buyers in England and Northern Ireland will pay no stamp duty on only the first £300,000 of their purchase, down from £425,000. If the new home is not their first home, only the first £125,000 will be duty free, down from £250,000.
What is stamp duty?
Officially called Stamp Duty Land Tax (SDLT), stamp duty is a tax paid at the point of purchasing a property. There are different taxes in Wales (the Land Transaction Tax) and Scotland (the Land and Buildings Transaction Tax).
In England and Northern Ireland, SDLT is charged at a staggered rate depending on the property sale price, with each portion attracting a different rate.
First-time buyers receive a discounted rate. Currently, there is no SDLT up to £425,000 and 5% on the portion from £425,001 to £625,000. To be eligible, it must be the first residential property you – or anyone you are buying with – has ever purchased. It is also a requirement for the purchase price to be £625,000 or less to claim the relief.
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 buying the property, it is not the only residential property you own, you will need to pay 5% on top of these rates. In some cases, this can be refunded if the previous main home is sold 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. According to Leeds Building Society, the changes will result in buyers having to pay stamp duty on 93% of properties on the market in England.
The changes will mean from 1 April 2025, stamp duty is charged at the following rate:
| Stamp duty threshold | Main residence - Stamp duty payable before 1 April 2025 |
Main residence - Stamp duty payable from 1 April 2025 |
| Up to £125,000 | 0% | 0% |
| £125,001 to £250,000 | 0% | 2% |
| £250,001 to £925,000 | 5% | 5% |
| £925,001 to £1.5 million | 10% | 10% |
| Over £1.5 million | 12% | 12% |
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.
| Stamp duty threshold | Main residence, first-time buyer - Stamp duty payable before 1 April 2025 |
Main residence, first-time buyer - Stamp duty payable from 1 April 2025 |
| Up to £300,000 | 0% | 0% |
| £300,000.01 to £425,000 | 0% | 5% |
| £425,000.01 to £500,000 | 5% | 5% |
| £500,000.01 to £625,000 | 5% | You cannot claim first-time buyer relief if the price is over £500,000 |
| Over £6250,000 | You cannot claim first-time buyer relief if the price is over £500,000 | You cannot claim first-time buyer relief if the price is over £500,000 |
This means someone buying their first home for £425,000 in March 2025 would pay no stamp duty, but if the purchase completed in April 2025, they would need to pay £6,250.
It is still possible that the government is not yet done with plans to reform SDLT, so these assumed changes may yet be adjusted before they come into force.
