Changes to Stamp Duty Land Tax

From 1 April 2025, the Stamp Duty Land Tax (“SDLT”) thresholds are changing, meaning that buyers may be required to pay an increased amount of SDLT if completion takes place after this date.

SDLT is a tax due to HMRC when purchasing property. Whether you will be liable for SDLT depends on factors such as the purchase price, whether you are a first-time buyer and whether you already own property.

Below is an explanation of the changes that came about from the Autumn Budget in respect of SDLT on residential property purchases.

Standard rates of SDLT

Under current thresholds, SDLT is payable only when buying property over £250,000. From 1 April 2025, this threshold will reduce back to £125,000 and therefore SDLT is payable if the purchase price exceeds this amount.

First-time buyers

Under current thresholds, first-time buyers can purchase property up to £425,000 without paying SDLT and have a reduced rate of 5% where the purchase price is up to £625,000. However, from 1 April 2025, the threshold will reduce to £300,000, with the 5% reduced rate only applying up to a purchase price of up to £500,000.

Higher rates of SDLT

The Autumn Budget announced that the higher rates of SDLT on additional property purchases (second homes, investment properties and purchases made through companies) would increase from 3% to 5% from 31 October 2024.

Companies and other corporate entities purchasing residential property over £500,000 will have to pay SDLT at a rate of 17% (increased from 15% pre-31 October 2024).

Be aware of the marriage trap

When assessing a buyer’s position for SDLT, HMRC take into account any property owned by a spouse. For example, if one spouse is purchasing property and is a first-time buyer, they would expect to receive the first-time buyer’s relief. However, if their spouse already owns property, then first-time buyer’s relief is not available and the higher rates of SDLT may apply. Essentially, HMRC assess married couples as one entity for SDLT purposes.

Buying property in joint names

If a residential property is being purchased jointly by two people and one is a first-time buyer and the other has owned property previously, then the first-time buyer relief is not available and SDLT is payable at the standard rates. Further, if the first-time buyer is purchasing a property with someone who already owns property, then the first-time buyer relief cannot be used and SDLT will be payable at the higher rates.

Moss Solicitors are experienced in guiding clients through their journey of selling and buying property. Please do contact a member of our Residential Conveyancing Department for further information.