If you are buying a property in England or Northern Ireland, you need to pay Stamp Duty Land Tax (SDLT).
This tax is not going anywhere. However, it is changing or, more specifically, the thresholds where SDLT applies will change. This means many homebuyers could end up paying more when purchasing a property.
If you are planning to buy a home, it is essential to understand the 2025 Stamp Duty increase now so you do not get caught off guard by higher costs. In this article, we will explain the main changes and what you need to know.
Stamp Duty Land Tax (SDLT) is a type of tax you pay when buying property or land. The amount of tax depends on the property’s price and whether you are a first-time buyer or an existing homeowner.
Certain Stamp Duty thresholds apply, and rates vary, with higher-value properties incurring higher tax rates. If your property value is under these thresholds, you won’t have to pay any SDLT.
Remember, this is not a fixed tax for buying a house anywhere in the UK. SDLT only applies to England and Northern Ireland. In Scotland, you pay Land and Buildings Transaction Tax and Wales has a Land Transaction Tax.
The Stamp Duty changes begin on 1st April 2025 and affect the thresholds – where the tax starts to apply.
Let’s first look at the old thresholds, which are in place until 31st March 2025.
SDLT currently applies after the following:
This will now change from 1st April 2025 to:
As you can see, the minimum thresholds are dropping by £125,000 for residential and first-time buyer properties. The non-residential land and property threshold will remain the same.
To avoid higher Stamp Duty costs in the future, you would have to purchase a property below these new lower thresholds. However, this won’t be possible for all buyers.
Completing the purchase before 1 April 2025 is the main way to save on SDLT when buying a house in 2025.
If you buy a house after the changes begin, your only option to avoid this tax is to buy a property under the threshold.
Other first time buyer tips include buying a new-build home with incentives that offset the SDLT, opting for a shared ownership scheme or using a Lifetime ISA to boost your savings with government assistance.
Each strategy has its benefits and drawbacks, so be sure to explore the options thoroughly before settling on the right one for you.
The SDLT thresholds are changing and they will result in more buyers having to pay the tax. You may be able to mitigate some of the impact with proper planning, but ultimately, if you are planning to purchase a property in 2025 or later, be sure to factor these additional costs into your budget to avoid any financial surprises.
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