Whether you are a first-time buyer, moving to a new home or purchasing an additional residential property, these Stamp Duty changes could affect you. Below, we summarise the changes that affect residential properties.

There are different rates which are applicable to non-residential and mixed land transactions and these are not covered in this briefing note.

What is Stamp Duty Land Tax, and when is it payable?

Stamp Duty Land Tax (SDLT or Stamp Duty) is a tax payable to HM Revenue and Customs (HMRC) when buying residential property or non-residential and mixed land in England and Northern Ireland; Stamp Duty applies to freehold or leasehold properties. The amount of SDLT liability will depend on several factors, including, but not limited to, whether a buyer is:

•  a UK resident
•  purchasing a property as an individual or company
• a first-time buyer
• replacing a main residence
• purchasing additional property
• purchasing non-residential and mixed land and property

As a buyer, you are required to pay Stamp Duty within fourteen days of completion of your purchase. Your solicitor will, on your behalf, file your Stamp Duty return with HMRC and submit your payment for any duty payable.

There are some instances where you can benefit from a relief, which results in the Stamp Duty being reduced, or you can, in certain circumstances, apply for an exemption where no Stamp Duty is payable. There are several reliefs and exemptions, as detailed on the Gov.UK website, the most common of which are;

Reliefs:

• first-time buyers
• building companies buying an individual’s home
• companies transferring property to another group company
• charities buying for charitable purposes
• right to buy properties
• registered providers of social housing

Exemptions:

• no money or other payment changes hands
• property is left to you in a will
• property is transferred because of divorce or dissolution of a civil partnership
• you buy a freehold property for less than £40,000

Why and when is Stamp Duty changing?

In September 2022, the then-Conservative Government announced a temporary change to Stamp Duty, which lowered the upfront costs for buyers when moving home. This was implemented to assist and support the housing market and individuals through the COVID-19 pandemic.

Whilst this measure was initially announced as a permanent change, at the October Budget 2022, the Government announced that the increase in the residential nil-rate threshold would end on 31 March 2025.

During the October Budget 2024, the new Labour Government confirmed these changes as well as implementing further changes to purchases of additional residential properties by individuals and companies. These measures came into effect on 31 October 2024.

Higher rate for corporate bodies: from 31 October 2024

Until 30 October 2024, Stamp Duty was charged at 15% on interests in residential dwellings costing more than £500,000 where certain corporate bodies/non-natural persons purchased them.

The higher rate for corporate bodies was increased to 17% on 31 October 2024.

Higher rate for additional dwellings: from 31 October 2024

When purchasing an additional property, there was an SDLT surcharge of 3% on top of the standard Stamp Duty residential rates if, when buying a new residential property, it means that, on the date of completion, you would own more than one property.

From 31 October 2024, the surcharge was increased to 5% above the standard Stamp Duty rates.

However, where contracts had been exchanged before 31 October 2024, but completion took place on or after 31 October 2024, the surcharge of 3% will apply instead of 5%.

This measure does not apply to Scotland or Wales where devolved land transaction taxes apply.

2025 changes: from 01 April 2025

In terms of what is to come, several changes are coming into effect as of 01 April 2025, which are as follows:

• The nil rate threshold, which is currently £250,000, will be reduced and return to the previous level of £125,000.
• The nil rate threshold for first-time buyers which is currently £425,000 will be reduced and return to the previous level of £300,000.
• The maximum purchase price for which first-time buyers’ relief can be claimed is currently £625,000 and will return to the previous level of £500,000.

Standard Residential Properties

Until 31 March 2025, the nil-rate threshold in England and Northern Ireland sits at £250,000, meaning that anyone purchasing a property will not pay Stamp Duty on the first £250,000, with Stamp Duty payable on £250,001 and above.

However, for any completions on or after 01 April 2025, the nil-rate threshold will reduce back to the pre-September 2022 level of £125,000. This now means that as of 01 April, homebuyers will pay a 2% Stamp Duty on any purchase price between £125,001 – £250,000. The current and future rates are shown in the comparison tables below:

Stamp Duty rates until 31 March 2025 for main residences in England:

Proportion of property value	Rate for main residence
Up to £250,000	0%
£250,001 to £925,000	5%
£925,001 to £1.5 million	10%
Over £1.5 million	12%

Stamp Duty rates from 01 April 2025 for main residences in England:

Proportion of property value	Rate for main residence
Up to £125,000	0%
£125,001 to £250,000	2%
£250,001 to £925,000	5%
£925,001 to £1.5 million	10%
Over £1.5 million	12%

These changes in the Stamp Duty rates mean that, on average, the additional Stamp Duty payable on a standard residential purchase of a freehold property, which is to be a main residence for a UK resident, will increase by £2,500 as of 01 April 2025.

How will the Stamp Duty changes affect first-time buyers?

It can be said that the most affected group will be first-time buyers. This is on the basis that the nil rate band is being reduced from £250,000 to £125,000, as well as the first-time buyers’ relief being reduced from £625,000 to £500,000. The below tables show the change in first-time buyers’ rates.

First-time buyers’ Stamp Duty rates until 31 March 2025:

Proportion of property value	Rate for first-time buyers
Up to £425,000	0%
£425,001 to £625,000	5%

First-time buyers’ Stamp Duty rates from 01 April 2025:

Proportion of property value	Rate for first-time buyers
Up to £300,000	0%
£300,001 to £500,000	5%

How will the Stamp Duty changes affect additional home purchases?

For those purchasing additional residential property, such as a second home, a holiday home, or a buy-to-let investment, the Stamp Duty surcharge has increased from 3% to 5%. This increase is in line with the changes which were implemented on 31 October 2024.

In addition to the increase in the surcharge, which has already taken place, and the reduction in the nil rate band will come into effect on 01 April 2025, this means, where the property price is £125,001 or greater, the minimum rate of SDLT on additional properties will be 7%, as the buyer has to pay 2% over £125,001 plus the additional 5% surcharge.

Corporations and other non-natural persons acquiring residential properties valued over £500,000 will face a Stamp Duty increase from 15% to 17%, in line with changes implemented on 31 October 2024.

The below table shows the Stamp Duty rates for additional properties in England:

Between 31 October 2024 and 31 March 2025:

Proportion of property value	Rate for additional property
Up to £250,000	5%
£250,001 to £925,000	10%
£925,001 to £1.5 million	15%
Over £1.5 million	17%

 

From 01 April 2025:

Proportion of property value	Rate for additional property
Up to £125,000	5%
£125,001 to £250,000	7%
£250,001 to £925,000	10%
£925,001 to £1.5 million	15%
Over £1.5 million	17%

How to Prepare

Calculate Your SDLT

Use the updated SDLT calculator on the Government website to understand how much tax you will owe based on the new rates. If you are an investor, you must ensure that the higher acquisition costs and the higher SDLT surcharges (up from 3% to 5% as of 31 October 2024) have also been factored into your return.

Plan Your Purchase

If you’re a first-time buyer or planning to buy an additional property, consider completing your purchase before 01 April 2025 in order to benefit from the current thresholds. However, there will be factors beyond your control, and there is no guarantee that it will be possible to complete before further changes. You should budget for payment of Stamp Duty at the rates as of 01 April 2025 in case your transaction is not completed by this date.

Seek Professional Advice

SDLT is a complex self-assessment tax; the onus is on you, the taxpayer, to make the necessary land transaction return, calculate the tax and pay it across. You should consult with a solicitor or tax advisor to navigate these changes effectively. Legal and financial professionals can ensure that you understand any tax implications.

The upcoming changes to SDLT are significant and will affect all future homebuyers. By understanding these adjustments and planning accordingly, you can better manage your property purchase and avoid unexpected costs.

At Ashtons Legal, we have a well-rounded property team that will be able to assist with all aspects of residential, commercial, and agricultural purchases and answer any Stamp Duty-related questions you may have.

We Can Help You

If you believe we can assist you when purchasing or selling your home, or other Residential Conveyancing legal advice, please get in contact with us on 0330 404 0777 or email enquiry@ashtonslegal.co.uk.