Stamp Duty Changes

As mentioned in our summary of the recent Autumn Budget announcement, Stamp Duty Land Tax (SDLT or Stamp Duty) rates are changing from 1st April 2025. Thresholds were increased in September 2022 and whilst some hoped they may continue, the government has confirmed they will be coming to an end at the end of March 2025.

Although this change will affect everyone looking to move, first-time buyers may feel the brunt the most. Currently, they pay no stamp duty on homes worth up to £425,000. However, with the threshold dropping to £300,000, they would now face a £6,250 stamp duty bill.

In addition, those looking to buy a second home or buy to let property will have an immediate increase of 2% in the stamp duty surcharge.

We’ve laid out these changes in some quick reference tables to help show you how this could affect your move.

Why is stamp duty changing?

In September 2022, the then Conservative Government announced a temporary change to stamp duty, lowering the upfront costs of moving home. The aim of this was to support the housing market, the jobs and businesses that rely on it, and those who were hoping to get on the housing ladder.

Whilst this measure was initially announced as a permanent change, at the Autumn Statement 2022, the government announced that the increase in the residential nil-rate threshold will end on 31 March 2025.

Looking to move home?

The nil rate threshold which is currently £250,000 will return to the previous level of £125,000, and the second £125,000 will now be chargeable at 2%.

This means that anyone looking to move into a property worth more than £125,000 will pay an extra £2,500 in stamp duty from April 1st.

This is based on a standard residential purchase of a freehold property, which is to be a main residence for an UK resident.

Proportion of property value	Current rates	Rates from 1st April 2025
Up to £125,000	0%	0%
£125,001 to £250,000	0%	2%
£250,001 to £925,000	5%	5%
£925,001 to £1.5 million	10%	10%
Over £1.5 million	12%	12%

First-time buyers

The nil rate threshold for first-time buyers which is currently £425,000 will return to the previous level of £300,000.

The maximum purchase price for which First-Time Buyers Relief (a reduced stamp duty rate) can be claimed is currently £625,000 and will return to the previous level of £500,000.

By reducing the nil rate threshold by £125,000 and reducing the maximum purchase price for which first-time buyers’ relief can be claimed by the same amount, it could make it even harder for some first-time buyers to get onto the property ladder.

Rate	Current thresholds	Thresholds from 1st April 2025
0%	Up to £425,000	Up to £300,000
5%	£425,001 to £625,000	£300,001 to £500,000

For example, if you’re a first-time buyer looking to buy a £625,000 house in England after the change, you’ll be paying an extra £11,250 in stamp duty, as you won’t be entitled to any additional relief and would be subject to usual thresholds.

Or, on a £500,000 property, the impact would be £6,250.

Second home purchases

Second Homes, Buy-to-Let, and Company Purchases: The SDLT surcharge for these categories will increase from 3% to 5% with effect from 31st October 2024.

An extra band will then be added to the thresholds from April in line with main residences.

Proportion of property value	Current rates	Rates from 31st October 2024	Rates from 1st April 2025
Up to £125,000	3%	5%	5%
£125,001 to £250,000	3%	5%	7%
£250,001 to £925,000	8%	10%	10%
£925,001 to £1.5 million	13%	15%	15%
Over £1.5 million	15%	17%	17%

For example, if you’re buying a second home valued at £300,000 after April 1st, you will now pay an extra £8,500 more than you would have done before the end of October.

How can I beat the stamp duty changes?

To take advantage of the current stamp duty rates and save yourself thousands of pounds, you’ll need to have completed on your property purchase by 1st April 2025. Whilst this date might seem quite far away, the average time to complete a house purchase in the UK is between 12 and 16 weeks and can take longer in certain circumstances.

This post is the opinion of Velarium Wealth and contains our understanding of tax treatment in the UK as of 30th October 2024 that we feel is relevant at the current time. This has been prepared for general information only and is not guaranteed to be complete or accurate. It does not contain all of the information which an investor may require in order to make an investment decision.