Home buyers in England and Northern Ireland will pay more Stamp Duty Land Tax (SDLT) after rates are set to change on April 1, 2025.
What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is a tax imposed by the government on the purchase of land or properties over a certain value in the UK.
The amount you are charged depends on your personal circumstances, such as whether you are a first-time buyer, already owning a property or whether the property will be used as a residence or mixed-use property.
The tax is paid to His Majesty’s Revenue and Customs (HMRC).
You must pay the Stamp Duty Land Tax (SDLT) when you:
- Buy a freehold property
- Buy a new or existing leasehold
- Buy a property through a shared ownership scheme
- Take on a mortgage or buy a share in a house
The cost of the property, whether it will be utilised for residential purposes, and if you own any other property, all affect how much stamp duty you owe.
When you purchase residential property, such as a house or flat, you often have to pay SDLT on rising sections of the property price.
The amount you pay depends on:
- When you bought the property
- How much you paid for it
- Whether you are eligible for relief or an exemption
Stamp Duty changes
Currently, buyers of homes worth less than £250,000 do not pay any stamp duty.
This limit was temporarily doubled from £125,000 in the September 2022 mini-budget.
The threshold for those buying their first property is £425,000 when buying a home of less than £625,000), which was raised from £300,000 (when buying a home of less than £500,000), as part of the same mini-budget.
You pay SDLT at these residential property rates for a single property if, after buying the property, it is the only residential property you own. You usually pay 5% on top of these rates if you own another residential property.
Rates up to 31 March 2025:
- £0-£250,000 (£425,000 for most first-time buyers) = 0%
- £250,001-£925,000 = 5%
- £925,001-£1.5m = 10%
- £1.5m+ = 12%
Rates from 1 April 2025:
From 1st April 2025, the zero percent threshold will drop back to its previous level, and the first-time buyers’ threshold will revert to £300,000:
- £0-£125,000 (£300,000 for most first-time buyers) = 0%
- £125,001-£250,000 = 2%
- £250,001-£925,000 = 5%
- £925,001-£1.5m = 10%
- £1.5m+ = 12%
If you already own a residential property worth £40,000 or more, and you buy another (or a part of one), you also have to pay an additional amount on top of the rates above, external.
From 1 April, this will be another 5% on properties worth up to £125,000, with higher rates for more expensive purchases.
Firms which buy dwellings worth more than £500,000 have to pay a single rate of stamp duty of 17%.
Impact on first-time buyers
When buying your first home as a first-time buyer, you are eligible to claim a discount if you and anyone else you are buying with are first-time buyers.
The discount you can claim depends on when you purchase the property:
Discount up to 31 March 2025
You will pay:
- No SDLT up to £425,000
- 5% SDLT on the portion from £425,001 to £625,000
If the price is over £625,000, you cannot claim the relief. Follow the rules for people who have bought a home before.
Discount from 1 April 2025
You will pay:
- No SDLT up to £300,000
- 5% SDLT on the portion from £300,001 to £500,000
If the price is over £500,000, you cannot claim the relief.
If you plan to buy a house after that date, these changes could make your home purchase more expensive by thousands of pounds.
For first-time homebuyers, you could pay £6,000 or more for your purchase.
Higher rates for additional properties
When buying a new residential property, you will usually have to pay 5% on top of SDLT rates if it means you will own more than one property.
However, if you are replacing your main residence, you will not pay the extra 5% SDLT if both of the following applies:
- The property you are buying is replacing your main residence.
- Your previous main residence was sold within 36 months of completing your new purchase.
Why sellers should act now
The approaching stamp duty changes create a unique window of opportunity for sellers, especially those with rental properties or second homes. Here is why:
- Increased Buyer Demand Before April 2025 – Buyers are eager to complete purchases before new rates take effect, potentially benefiting property listings as they are motivated and willing to offer strong prices.
- Potential for Faster Sales – Buyer activity in April 2025 could lead to faster sales, especially if conveyancing times are quick, as new tax rates may impact completion.
- Reduced Buyer Budgets After April – New stamp duty rules may cause increased tax payments to strain buyers’ budgets, potentially resulting in reduced offers and longer selling times due to increased price sensitivity.
- Avoiding Downward Pressure on Prices – Increased costs may cause buyers to pause plans or focus on properties below new thresholds, potentially impacting property prices in specific market segments.
To understand how this will impact you, use the Stamp Duty Land Tax SDLT calculator or check the higher rates to work out how much tax you will pay.
Frequently asked questions
When do you have to pay stamp duty?
You have 14 days to pay stamp duty from the date of completion in England and Northern Ireland, external.
In Scotland and Wales, you have 30 days from the point of purchase to pay the tax due.
If it takes longer, you could face a fine or be charged interest on the amount you owe.
How do you pay stamp duty?
House buyers often pay via their solicitors, but you can also pay directly online, or by cheque or cash in many banks.
It is also possible to add stamp duty to mortgage loans and increase your debt to cover the cost of the tax, but you could end up paying significantly more in interest payments.
What are the rates if you are not a UK resident?
If you are not present in the UK for at least 183 days (6 months) during the 12 months before your purchase, you are ‘not a UK resident’ for the purposes of SDLT.
You will usually pay a 2% surcharge if you are buying a residential property in England or Northern Ireland.
You may not have to pay a surcharge on certain properties, transactions or if you are a particular type of buyer.
Check if you are eligible for a refund of the surcharge.
If you have to pay the surcharge, you will also have to pay any other rates of SDLT that apply, for example:
- if you already own a property and you are buying an additional property
- if you are a first-time buyer
Use the SDLT calculator to work out how much tax you will pay.
New leasehold sales and transfers
When you buy a new residential leasehold property you pay SDLT on the purchase price of the lease (the lease premium) using the rates stated in the article above.
If the total rent above the lease (known as the ‘net present value’) is more than the SDLT threshold (currently £250,000), you will pay SDLT at 1% on the portion over £250,000.
From 1 April 2025 the SDLT threshold will change to £125,000.
This does not apply to existing (‘assigned’) leases.
You can work out how much SDLT you will pay for your residential lease using HMRC’s:
WHAT TO DO NEXT
To make a start on the next step in your property journey, get in touch today to book a consultation with a member of our team. Call us on 0113 218 5727 to find out how we can help you.
