Stamp duty

New Stamp Duty Rules: How Buyers Can Save Before the April 2025 Deadline

In the UK, Stamp Duty Land Tax (SDLT) is a key consideration for property buyers, as it adds a notable cost to most purchases. However, recent government changes to SDLT thresholds will increase tax costs for many buyers starting in April 2025. Here’s an overview of the current rates, upcoming changes, and examples of how buyers can save by acting before the deadline.

Current SDLT Rates (Until March 31, 2025)

1. For First-Time Buyers:
   • 0% SDLT on homes valued up to £425,000.
   • 5% on the portion between £425,001 and £625,000.

   This means first-time buyers currently avoid SDLT on properties up to £425,000, offering significant savings in competitive markets.

2. For Standard Buyers (Anyone who has owned property before or isn’t a first-time buyer):
   • 0% SDLT on the first £250,000.
   • 5% on amounts between £250,001 and £925,000.

   These exemptions offer affordability benefits to buyers, especially those purchasing homes below £250,000.

What Changes in April 2025?

Starting April 1, 2025, two key SDLT exemptions will be lowered:

• General SDLT Threshold: The current nil-rate threshold of £250,000 will drop to £125,000 for all buyers, meaning that any purchase over £125,000 will now incur SDLT.
• First-Time Buyer Relief: The threshold for first-time buyers will fall from £425,000 to £300,000. Properties valued between £300,001 and £500,000 will incur a 5% charge on the amount over £300,000, resulting in increased SDLT costs for first-time buyers who were previously exempt.

Examples: How Much Buyers Can Save by Purchasing Now

Let’s break down these changes with specific examples to illustrate the difference in SDLT costs before and after April 2025:

1. Example for a First-Time Buyer: Purchasing a £400,000 Property
   • Before April 2025: SDLT is 0% on the full amount, so no SDLT is due.
   • After April 2025: SDLT is 5% on the amount over £300,000.
   • SDLT Cost in April 2025: 5% of £100,000 = £5,000.

   By purchasing before April 2025, a first-time buyer could save £5,000 on this property.

2. Example for a Standard Buyer: Purchasing a £300,000 Property
   • Before April 2025: SDLT is only due on the amount over £250,000 (i.e., £50,000), so they pay 5% of £50,000 = £2,500.
   • After April 2025: SDLT applies starting from £125,000.
     • 2% on £125,000 to £250,000 = £2,500.
     • 5% on the remaining £50,000 = £2,500.
   • Total SDLT After April 2025: £5,000.

   By purchasing before April 2025, this buyer could save £2,500.

What This Means for Buyers

For many prospective buyers, these changes mean an additional expense, especially for first-time buyers who currently enjoy larger exemptions. By acting before the April 2025 deadline, buyers can take advantage of higher nil-rate thresholds and reduce overall SDLT costs.

Next Steps: How to Plan for SDLT Changes

1. Consider Moving Up Your Timeline: Buyers who are financially ready may benefit from purchasing before April 2025 to secure current SDLT benefits.
2. Calculate Your Savings: Use SDLT calculators on sites like Rightmove or consult an estate agent for estimates on potential SDLT costs now versus after April 2025.
3. Seek Professional Advice: Tax advisors or property professionals can help you weigh the benefits of purchasing now versus waiting, taking into account the full range of property-related costs and market conditions.

With higher SDLT costs on the horizon, careful planning and early action can make a significant financial difference, especially for those buying higher-value properties. This change represents a chance for buyers to save, but timing will be crucial in maximizing those savings.