Stamp duty changes coming in March 2025 - what does it mean for you?
Stamp Duty Land Tax (SDLT) rates are set to change on 31st March 2025, which could significantly increase the cost of moving home, particularly for first-time buyers. The temporary SDLT thresholds introduced in September 2022 will end, impacting many homebuyers.
What’s Changing?
Currently, first-time buyers pay no stamp duty on homes up to £425,000, but from 31st March 2025, this threshold will drop to £300,000. This means first-time buyers could face on average a £6,250 stamp duty charge when purchasing a home previously exempt from the tax.
Understanding Stamp Duty or Stamp Duty Land Tax (SDLT), is a tax paid by property buyers in the UK. The amount depends on factors such as residency, whether the buyer is an individual or a company, and if the purchase is a first home or an additional property.
Why Are SDLT Rates Changing?
In September 2022, the government temporarily increased SDLT thresholds to support the housing market and make buying more affordable. However, the Autumn Statement 2022 confirmed these increases would end on 31st March 2025, reverting to previous rates.
How Will SDLT Rates Change?
From 31st March 2025, the nil-rate threshold for all buyers will drop from £250,000 to £125,000. For first-time buyers, the threshold will decrease from £425,000 to £300,000, and the maximum property price eligible for first-time buyer relief will drop from £625,000 to £500,000.
Stamp Duty Rates from 31st March 2025:
(Excludes first-time buyers)
- 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%
Impact on First-Time Buyers
First-time buyers will be most affected by these changes, as the reduction in the nil-rate threshold and maximum relief limit could make it harder to get on the property ladder. Currently, no stamp duty is paid on homes up to £425,000, but from 2025, this will only apply to properties up to £300,000, with 5% charged on homes between £300,001 and £500,000.
How to Avoid Higher SDLT Costs
To benefit from the current SDLT rates, you need to complete your property purchase by 31st March 2025. Given that the average time to complete a house purchase is 12 to 16 weeks, you should aim to start the conveyancing process by the end of 2024.
These changes could add thousands to your home-buying costs, so acting early is crucial if you want to take advantage of the current rates.