Up and coming changes to Stamp Duty Land Tax (SDLT) in the UK – 31 March 2025

As of 31 March 2025, significant changes to Stamp Duty Land Tax (SDLT) in the UK will take effect, impacting property buyers across England and Northern Ireland. These adjustments are set to alter the tax landscape, particularly affecting first-time buyers and those purchasing second homes or investment properties.

Standard Residential Purchases:

For individuals purchasing a primary residence, the SDLT rates will revert to pre-September 2022 levels:

• Up to £125,000: 0%
• £125,001 to £250,000: 2%
• £250,001 to £925,000: 5%
• £925,001 to £1.5 million: 10%
• Above £1.5 million: 12%

This reversion means that properties purchased for up to £250,000 will incur a 2% tax on the portion above £125,000, compared to the current 0% rate up to £250,000.

First-Time Buyers:

First-time buyers will also experience changes:

• Up to £300,000: 0%
• £300,001 to £500,000: 5%

Properties exceeding £500,000 will not qualify for first-time buyer relief. Currently, the threshold is £425,000, with relief extending up to £625,000. This adjustment means that first-time buyers will pay 5% on the portion of the property’s price between £300,001 and £500,000.

Additional Property Purchases:

For second homes or investment properties, an additional 5% surcharge applies to the standard SDLT rates. This means that the effective tax rates for these properties will be:

• Up to £125,000: 5%
• £125,001 to £250,000: 7%
• £250,001 to £925,000: 10%
• £925,001 to £1.5 million: 15%
• Above £1.5 million: 17%

This surcharge aims to discourage speculative property investments and support the housing market for primary residence buyers.

Impact on First-Time Buyers:

The reduction in the first-time buyer relief threshold from £425,000 to £300,000 means that many first-time buyers will face higher tax liabilities. For example, purchasing a property priced at £350,000 will result in a £2,500 SDLT bill under the new rules, compared to the current £0. This change is expected to affect first-time buyers in regions with higher property prices.

Planning Ahead:

Given these forthcoming changes, prospective buyers are advised to act promptly. To benefit from the current SDLT rates, transactions must be completed by 31 March 2025. This includes exchanging contracts, completing the purchase, and moving into the new home. Delays beyond this date will subject buyers to the revised tax rates.

Conclusion:

The upcoming changes to SDLT are poised to impact various segments of the property market. First-time buyers should be aware of the reduced relief thresholds and plan accordingly. Staying informed and consulting with property professionals can help navigate these changes effectively.

Progression Solicitors are working alongside clients to achieve suitable completion dates prior to the increased rates coming into effect.

If you would like to speak to a member of our team, please contact us on 0333 305 777.