Summary of Upcoming UK Stamp Duty Changes (Effective April 1, 2025)

The UK government is implementing significant changes to Stamp Duty Land Tax (SDLT) rates, affecting both first-time buyers and purchasers of additional properties, such as second homes and buy-to-let investments.

Changes for First-Time Buyers

• Current Rates (Until March 31, 2025):
  • 0% SDLT on properties up to £425,000.
  • Reduced rates apply for properties between £425,001 and £625,000.
• New Rates (From April 1, 2025):
  • 0% SDLT on properties up to £300,000.
  • 5% SDLT on the portion between £300,001 and £500,000.

Example: Purchasing a £350,000 Property

• Before April 1, 2025: No SDLT due (within the £425,000 threshold).
• After April 1, 2025:
  • £0 on the first £300,000.
  • 5% on the remaining £50,000 = £2,500 SDLT.

Impact: First-time buyers purchasing properties over £300,000 will incur higher SDLT charges from April 2025.

Changes for Additional Properties (Second Homes and Buy-to-Let)

• Surcharge Increase: On October 31, 2024, the SDLT surcharge for additional properties increased from 3% to 5%.
• gov.uk
• Threshold Reduction: From April 1, 2025, the standard SDLT threshold decreases from £250,000 to £125,000.
• gov.uk

New SDLT Rates for Additional Properties (From April 1, 2025):

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

Example: Purchasing a £400,000 Buy-to-Let Property

• Before October 31, 2024:
  • Standard SDLT: £10,000
  • Surcharge (3%): £12,000
  • Total SDLT:£22,000

• After October 31, 2024, and Before April 1, 2025:
  • Standard SDLT: £10,000
  • Surcharge (5%): £20,000
  • Total SDLT:£30,000

• From April 1, 2025:
  • £0 on the first £125,000.
  • 2% on the next £125,000 = £2,500.
  • 5% on the next £150,000 = £7,500.
  • Standard SDLT Total:£10,000.
  • Surcharge (5%) on entire amount:£20,000.
  • Total SDLT:£30,000.

Impact: The surcharge increase and threshold reduction result in higher SDLT liabilities for additional property purchases.

Planning Considerations

• For First-Time Buyers: If you're considering purchasing a property over £300,000, completing the transaction before April 1, 2025, could save you on SDLT.
• For Additional Property Buyers: The increased surcharge and lowered thresholds mean higher SDLT costs. Planning and budgeting for these changes is essential.

Note: Always consult with a property professional or financial advisor to understand how these changes specifically impact your situation.