What’s Happening to Stamp Duty This Year?

What Is Happening To Stamp Duty This Year - Barrain London Estate Agents

If you’re planning to buy a home in England or Northern Ireland, changes to Stamp Duty Land Tax (SDLT) coming into effect on 1 April 2025 could impact you. These updates will affect how much you pay when purchasing a property, with both general homebuyers and first-time buyers seeing a shift in thresholds and rates.

Let’s break it down so you know exactly what’s happening and how to prepare.

What Is Stamp Duty and Why is It Changing?

Stamp Duty Land Tax is a tax paid when buying property or land in England and Northern Ireland. The amount depends on the property’s value and whether you’re a first-time buyer, moving to a new home, or purchasing a second property.

From April 2025, the government will revert SDLT rates to their pre-2022 levels. These changes were initially introduced as temporary relief measures to support the housing market.

For second-home buyers, changes started earlier:

  • 31 October 2024: The surcharge for additional properties increased from 3% to 5%.
  • 1 April 2025: All SDLT rates for general buyers and first-time buyers will rise as thresholds are lowered.

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How Much Stamp Duty Will You Pay in 2025?

Here’s a clear look at the 2025 SDLT rates:

General Buyers

  • 0% on the first £125,000
  • 2% on £125,001 to £250,000
  • 5% on £250,001 to £925,000
  • 10% on £925,001 to £1.5 million
  • 12% above £1.5 million

First-Time Buyers

  • 0% on the first £300,000
  • 5% on £300,001 to £500,000
  • No relief for homes above £500,000

Second-Home Buyers

An additional 5% surcharge applies to all rates above £40,000.

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Examples of How Much You’ll Pay

  • For a £230,000 home (general buyer):

    • £125,000 x 0% = £0
    • £105,000 x 2% = £2,100
    • Total SDLT: £2,100
  • For a £350,000 home (first-time buyer):

    • £300,000 x 0% = £0
    • £50,000 x 5% = £2,500
    • Total SDLT: £2,500
  • For a £400,000 second home:

    • £125,000 x 5% = £6,250
    • £125,000 x 7% (2% + 5%) = £8,750
    • £150,000 x 10% = £15,000
    • Total SDLT: £30,000

Why Are These Changes Happening?

The government introduced temporary SDLT relief in 2022 to boost the housing market during economic uncertainty. This relief increased the thresholds, meaning buyers paid less tax. Now, the government aims to return SDLT to its previous levels to:

  • Generate revenue for public services.
  • Normalise the property market, preventing overheating.

Common Questions About Stamp Duty

How to Avoid the 3% (or 5%) Stamp Duty Surcharge?

You can avoid the surcharge if:

  • You sell your current main residence and replace it within three years.
  • The new property costs less than £40,000.
  • It’s a transfer due to separation or divorce.

Is the Government Planning More Changes to Stamp Duty?

As of now, the main focus is on returning to pre-2022 thresholds in 2025. Future changes could occur, depending on economic priorities.

Will There Be a Stamp Duty Holiday in 2024?

No. Instead, buyers should prepare for increased rates from April 2025 and act sooner if they want to save money.

Ready for the New Stamp Duty Rules?

Understand the 2025 updates to SDLT and prepare your finances to avoid unexpected expenses.

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How Can You Prepare for the 2025 Changes?

  1. Act Early: If you’re planning to buy, consider completing your purchase before 1 April 2025 to benefit from lower SDLT rates.
  2. Get Advice: Speak to a mortgage broker or solicitor to understand how these changes affect your finances.
  3. Plan for Additional Costs: If buying a second home, factor in the 5% surcharge.

Planning Your Property Purchase Smartly

The changes to Stamp Duty in 2025 mark a significant shift for homebuyers in England and Northern Ireland. Whether you’re purchasing your first home, moving to a new property, or investing in a second home, it’s important to understand how these updates will impact your budget.

Being informed and planning ahead can save you thousands, so take the time to calculate your potential costs and act accordingly.

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