The UK property market is set to see significant changes as new Stamp Duty Land Tax (SDLT) rules come into effect in April 2025. These changes will impact prospective home buyers and sellers, from first-time buyers to those looking to purchase an additional property. Here, we break down the key details of the reforms and what they mean for you.

What is Stamp Duty?

Stamp Duty is a tax paid on property transactions in England and Northern Ireland. Buyers are required to pay a percentage of the property’s purchase price, depending on its value and their individual circumstances. Different rates and thresholds apply depending on whether the buyer is a first-time buyer, moving to a new home, or purchasing an additional property.

What’s Changing?

Several changes will take effect from April 2025, and these will alter the SDLT thresholds and surcharges:

1. Reduced Nil Rate Thresholds

• The nil-rate threshold, currently set at £250,000, will drop back to its previous level of £125,000. This means that any property purchase above £125,000 will attract Stamp Duty.
• For first-time buyers, the nil-rate threshold will reduce from £425,000 to £300,000, requiring them to pay tax on properties priced above this amount.
• The maximum property value for which first-time buyers’ relief can be claimed will decrease from £625,000 to £500,000. Properties priced above £500,000 will not qualify for relief.

2. Added Band on Additional Properties

• Reflecting the general SDLT changes, an additional band will be added to the thresholds for additional property purchases.
• Buyers purchasing additional properties, such as second homes or buy-to-let investments, could face an increased surcharge if buying a property up to £250,000.
• Currently, the stamp duty rate for a property up to the value of £250,000 is 5%. Under the new rules kicking in in April, this 5% rate will be applicable to properties up to £125,000.
• Additional properties between £125,001 and £250,000 will now be charged at 7% under the new band.

How Will This Affect Buyers?

First-Time Buyers

The Stamp Duty changes are likely to have the most significant impact on first-time buyers. While the increase in the zero-rate threshold to £300,000 provides some relief, other adjustments may make it harder for some to get onto the property ladder.

Currently, first-time buyers pay no tax on properties up to £425,000, and they can claim discounted rates (5% on properties from £425,001 to £625,000). From April 2025, first-time buyers will only pay no Stamp Duty on properties up to £300,000, and the maximum purchase price eligible for first-time buyers’ relief will drop to £500,000. For properties priced between £300,000 and £500,000, they will pay 5% on the portion above £300,000.

This means, for example, a first-time buyer purchasing a £500,000 property would pay £10,000 in Stamp Duty under the new rules, compared to  3,750 under the current system. The reduced nil-rate threshold and lower maximum purchase price for relief could increase the financial burden on first-time buyers, particularly in higher-priced regions such as London and the South East.

Additional Property Buyers

Individuals buying additional properties for investment or as second homes could face higher costs due to the increased surcharge rate.

How Much More You’ll Need to Spend

Our new Stamp Duty Calculator takes helps you work out how much you’ll need to spend on stamp duty once the new rules take effect in April. Get started below:

Want to kickstart your property journey? Take 10 minutes to find out how much you could borrow by getting a mortgage in principle.