Are you ready for the stamp duty increase?

What is Stamp Duty?

When you buy property or land, a tax is usually levied on the transaction. This tax is known as Stamp Duty Land Tax (SDLT) in England and Northern Ireland, Land and Buildings Transaction Tax (LBTT) in Scotland, and Land Transaction Tax (LTT) in Wales. For simplicity, we’ll refer to it as ‘stamp duty’ throughout this guide.

Although the names vary, each UK nation employs a similar progressive system for stamp duty. This means you might pay different rates on different portions of the property’s price rather than a single rate on the entire amount.

Stamp duty can be a substantial expense, often amounting to thousands of pounds on an average-priced property. In 2024, homebuyers in England and Northern Ireland collectively spent over £10 billion on stamp duty, according to Coventry Building Society.

Below, we detail how stamp duty works and provide a calculator to help you determine your stamp duty liability.

Stamp Duty Rates

Here’s a breakdown of the thresholds and rates in England:

England

In England and Northern Ireland, no SDLT is due on the first £250,000 of a main residential property, or £425,000 if you’re a first-time buyer.

Stamp Duty Rates Until 31 March 2025 (England & Northern Ireland)

Note: The higher rate/surcharge does not apply if an additional property is bought for less than £40,000. The £425,000 first-time buyer threshold does not apply if the property costs more than £625,000; in this case, the £250,000 threshold applies.

Stamp Duty Rates From 1 April 2025 (England & Northern Ireland)

Note: The higher rate/surcharge does not apply if an additional property is bought for less than £40,000. The £300,000 first-time buyer threshold does not apply if the property costs more than £500,000; in this case, the £125,000 threshold applies.

Key Changes Effective from 1 April 2025

1. Lower Thresholds for SDLT
   • The nil rate threshold for residential properties will revert from £250,000 to £125,000.
   • For first-time buyers, the threshold will decrease from £425,000 to £300,000.
2. Standard SDLT Rates
   • The SDLT rates will be as follows:
     • £0-£125,000: 0%
     • £125,001-£250,000: 2%
     • £250,001-£925,000: 5%
     • £925,001-£1.5 million: 10%
     • Above £1.5 million: 12%
3. Additional Property Surcharge
   • If you already own a residential property worth £40,000 or more and buy another, you will continue to pay an additional 5% on top of the standard rates.
4. Company Purchases
   • The single rate of SDLT for companies and other non-natural persons buying residential properties worth more than £500,000 will remain at 17%.

Impact on Buyers

• Second-Home Buyers and Landlords: The lower thresholds mean higher SDLT costs for additional properties. For example, on a property priced at £500,000, the SDLT will increase significantly compared to the previous rates.
• First-Time Buyers: The reduced threshold means first-time buyers will pay more SDLT on properties priced between £300,000 and £425,000.

Strategic Considerations

• Budgeting: If you're planning to buy a property, consider completing the purchase before 1 April 2025 to benefit from the current higher thresholds.
• Long-Term Planning: Landlords should assess whether their rental income can offset the higher upfront costs and consider diversifying their property portfolios to balance risk.
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Calculate Your SDLT

Use the SDLT calculator on the GOV.UK website to determine how much tax you'll need to pay based on the new rates.

I hope this guide helps you understand the upcoming changes to Stamp Duty Land Tax. If you have any more questions or need further assistance, feel free to ask!

Team PL