Stamp Duty Changes 2025

Key Changes to Stamp Duty Land Tax

The 2024 Autumn Budget, delivered by Chancellor Rachel Reeves on 30th October, introduced significant changes to Stamp Duty Land Tax (SDLT) that will directly impact homebuyers and investors. Understanding the changes to land transaction taxes is vital for anyone paying SDLT on properties in England.

Until 31st March 2025, buyers in England and Northern Ireland can benefit from a higher exemption threshold of £425,000, with a reduced rate for properties up to £625,000. After this date, the exemption will drop to £300,000, which could increase costs for new homeowners. However, relief can be claimed if purchases are completed before the deadline, ensuring the impact on first-time buyers is minimised. Acting now can help secure substantial savings before these changes take effect.

Here is a breakdown:

First-Time Buyers:

Since 2022, first-time buyers have benefited from Stamp Duty exemptions on properties up to £425,000. However, this temporary relief will end soon.

What changes should first-time buyers expect?

• Until 31st March 2025, first-time buyers will pay no Stamp Duty on homes up to £425,000, with a reduced rate (5%) on properties between £425,000 and £625,000.
• From April 2025, the exemption will drop to £300,000. A 5% Stamp Duty will apply to homes priced between £300,000 and £500,000.
• For properties over £500,000, first-time buyers will pay the standard Stamp Duty rates.

Why should first-time buyers act now?
If you purchase before 31st March 2025, you will avoid the higher Stamp Duty costs, potentially saving thousands of pounds. Properties priced within the current exemption threshold will offer the biggest savings.

Investors and Second Home Buyers:

As of 31st October 2024, the Stamp Duty surcharge on second homes and buy-to-let properties increased from 3% to 5%. This means investors will face a higher tax burden when purchasing additional properties.

What does this mean for investors?

• If you already own a residential property worth £40,000 or more, and you buy another property, you’ll now pay an additional 5% surcharge on top of the standard Stamp Duty rates.
• This change significantly raises the cost of expanding rental portfolios.

Why does this matter for landlords?

• Many landlords are already facing challenges, including restricted tax relief on mortgage interest, stricter lending criteria, and higher interest rates. This new surcharge could further discourage property investment.
• The surcharge will not apply to contracts exchanged before 31st October 2024, but the higher tax will make future acquisitions more expensive.

The good news for landlords is that the Capital Gains Tax rate remains unchanged at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers.

Summary of Stamp Duty Changes:

• First-time buyers: You have until 31st March 2025 to take advantage of the current Stamp Duty exemptions for properties up to £425,000. After this, the exemption will drop to £300,000, and higher taxes will apply.
• Second home buyers and investors: A 5% surcharge on top of standard Stamp Duty rates now applies to the purchase of additional properties.
• Other buyers: The 0% Stamp Duty threshold for non-first-time buyers will decrease from £250,000 to £125,000 starting April 2025.

How to Save on Stamp Duty:

To save on Stamp Duty, it’s crucial to act before the upcoming deadlines. Whether you're a first-time buyer aiming to take advantage of the higher exemption limit, or an investor looking to assess the impact of the surcharge, understanding the changes and planning ahead can make a significant difference.

Get Professional Advice

‍If you are uncertain about how these updates affect your property plans or need personalised advice, email us today at quotes@bespokelawservices.co.uk or call us on 0345 3732030. Our expert team is here to guide you through these changes and help ensure your property transactions are as cost-effective as possible.