How will the New Stamp Duty Changes Affect You?

The Stamp Duty Land Tax (SDLT) will increase on the 1st April 2025. 

The UK property market is set to experience significant changes with upcoming Stamp Duty Land Tax (SDLT) changes that will impact both homebuyers and property investors.

In the Chancellor’s recent Autumn Budget, it was announced that Stamp Duty will increase for second properties, from 3% to 5% coming into effect the day after the budget on 31^st October.

However, what has subsequently been overlooked (partially due to not being mentioned in the budget), is that further changes to Stamp Duty Land Tax (SDLT)  are planned for the 1st of April 2025.

Under the previous government, the SDLT thresholds were increased to their current levels to help stimulate the housing market.

However, this was only a temporary measure which looks unlikely to be extended; meaning current rates will come to an end as planned on the 1st of April 2025.
 

What do the changes to SDLT mean for you?

These changes will not affect everyone immediately; if you currently own a property and have no plans to move, you will not be affected when the changes are introduced in 2025. 

However, if you are looking to move house, buy a second property, or plan to get onto the property ladder, the changes could result in additional SDLT charges that you may not have anticipated, if your purchase completes after the 1st April 2025.
 

How much is SDLT changing?

Current SDLT rates for Next Time Buyers 

Assuming it will be the only property owned, and that you reside in the UK:
 

Current SDLT for First Time Buyers

Current rates are:
 

• no SDLT up to £425,000
   
• 5% SDLT on the portion from £425,001 to £625,000

If the property price is over £625,000, then you will not be able to claim the relief, and the rates for Next Time Buyers (above) will apply to you. 

New SDLT rates for Next Time Buyers as of 1^st April 2025

Assuming it will be the only property owned, and that you reside in the UK:
 

New SDLT First Time Buyers as of 1^st April 2025

The new rates will be:
 

• no SDLT up to £300,000
   
• 5% SDLT on the portion from £300,001 to £500,000

If the property price is over £500,000, then you will not be able to claim the relief, and the rates for Next Time Buyers (above) will apply to you. 

How much more stamp duty will I need to pay?

Current Next Time Buyer Stamp Duty

Looking at an example provided by the government; on a property with a purchase price of £295,000, (assuming you are a next time buyer residing in the UK and do not own any other properties), you would currently pay SDLT of £2,250.

This is calculated as:
 

• 0% on the first £250,000 = £0
   
• 5% on the final £45,000 = £2,250
   
• Total SDLT = £2,250

Next Time Buyer Stamp Duty from the 1^st April 2025
 

On a property with a purchase price of £295,000, (with the same details as in the example above), you would pay SDLT of £4,750 (an increase of £2,500):
 

• 0% on the first £125,000 = £0
   
• 2% on the second £125,000 = £2,500
   
• 5% on the final £45,000 = £2,250
   
• Total SDLT = £4,750

Stamp Duty for Second Properties

However, it is worth noting that if you’re purchasing a second property (for example a Buy to Let, holiday home or if it will be the second property you own at completion) for a value of £295,000 then you would have an additional SDLT charge at 5% of £14,750, which would be an increase from the pre-budget charge of 3% at £8,850.
 

This would make your SDLT charge £17,000 if completing before 1^st April 2025, and £19,500 if completing your purchase after the 1^st April 2025.
 

Current First Time Buyer Stamp Duty:

Again, looking at example provided by the government, on a property purchase price of £500,000 and assuming you are a First Time buyer residing in the UK, you would currently pay SDLT of £3,750.

This is calculated as:
 

• 0% on the first £425,000 = £0
   
• 5% on the remaining £75,000 = £3,750
   
• Total SDLT = £3,750

First Time Buyer Stamp Duty from the 1^st April 2025:

On a property purchase price of £500,000, with the same details as in the example above, you would pay SDLT of £10,000 (an increase of £6,250).
 

This is calculated as:
 

• 0% on the first £300,000 = £0
   
• 5% on the remaining £200,000 = £10,000
   
• Total SDLT = £10,000

Timing Your Property Purchase to Avoid Higher Stamp Duty

It is important that we look at timescales for purchasing a property, with the stamp duty increases to ensure you have planned for the correct stamp duty.
 

Firstly, purchase timescales vary significantly. But generally speaking, the following timescales are a good indication:
 

• Freehold properties typically complete within 3 months
   
• Leasehold properties typically complete within 4 months.
   

Based on these timescales, in order to complete on a purchase before the new stamp duty changes apply, you will need to have started the purchase process before the 1st January 2025 for a freehold property, and the 1st December 2024 for a leasehold property. 

However, it is important to note that timescales can vary significantly, and completions can sometimes be significantly quicker or longer, based on complexity.  
 

Conclusion

Understanding these upcoming SDLT changes is crucial for anyone planning to enter or move through the property market.

The revised rates will substantially increase the tax burden for both First Time buyers and Next Time buyers, making it essential to plan purchases strategically to minimise any additional related costs.
 

If you're considering purchasing a property and want to potentially save thousands on Stamp Duty Land Tax, contact our mortgage advice team immediately to:
 

1. Assess your property buying options and confirm affordability
    
2. Understand the new tax implications
    
3. Plan your purchase before the threshold changes on the 1^st April 2025
    

*This article does not constitute regulated financial advice. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.