Beware of stamp duty changes!
Stamp Duty Land Tax (SDLT or Stamp Duty) rates are changing from 31st March 2025, when the temporary increases to the thresholds that were put in place in September 2022, are due to come to an end. Whilst this change will impact everyone planning to move, it’s FIRST TIME BUYERS who will be the most affected. Source: Zoopla Sept 2024 (https://www.zoopla.co.uk/)
First-time buyers currently pay no stamp duty when buying a home worth up to £425,000. On April 1st 2025 this threshold will drop to £300,000. This means they will go from paying nothing to paying £6,250 on stamp duty on a purchase of a property for £425,000.
Jukes Estate Agents Harlow show in the article below how these changes could affect your move.
What is Stamp Duty?
Stamp duty, or Stamp Duty Land Tax (SDLT) is a government tax which is paid by the buyer of a property, as a lump sum upon completion. It is paid by buyers who are purchasing a property or land over a certain price bracket.
The amount of SDLT liability depends on several factors, including (but not limited to) whether a buyer is:
- A UK resident
- Purchasing a property as an individual or company
- A first-time buyer
- Replacing a main residence
- Purchasing additional property
Why is Stamp Duty changing?
In September 2022, the Government announced a temporary change to Stamp Duty. Therefore, this would lower the upfront costs of moving home. The aim of this was to support the housing market, the jobs and businesses that rely on it, and those who were hoping to get on the housing ladder.
Whilst this measure was initially announced as a permanent change, at the Autumn Statement 2022, the government announced that the increase in the residential nil-rate threshold will end on 31 March 2025.
What is Stamp Duty Changing to?
From 31st March 2025, quite a few changes coming into effect:
Firstly, the nil rate threshold (currently £250,000), will return to the previous level of £125,000.
Secondly, the nil rate threshold for first-time buyers (currently £425,000), will return to the previous level of £300,000.
Finally, the maximum purchase price for which First-Time Buyers Relief (a reduced stamp duty rate) can be claimed is currently £625,000 and will return to the previous level of £500,000.
The table below shows the current stamp duty rates for main residences in Ehngland:
From 1st April 2025, the Stamp Duty rates will be:
How will Stamp Duty changes affect first time buyers?
These stamp duty changes are likely to have the most impact on first-time buyers. By reducing the nil rate threshold by £125,000 and reducing the maximum purchase price for which first-time buyers’ relief can be claimed by the same amount, it could make it even harder for some first-time buyers to get onto the property ladder.
Firstly, if you’re a first-time buyer you don’t have to pay any tax on properties up to £425,000.
Secondly, if the cost of the property you’re buying is up to £625,000 you’re also eligible for discounted rates. 5% on properties from £425,001 to £625,000.
Thirdly, From 1st April 2025, first-time buyers won’t have to pay stamp duty on properties up to only £300,000.
Finally, they’ll only get first-time buyers’ relief on properties up to £500,000 (5% on properties £300,000 to £500,000).
Current first time buyers Stamp Duty rates:
Example: If first time buyers bought a house for £525,000 in England. They would only pay Stamp Duty on £100,000. Therefore, £5,000 as the first £425,000 if free!
First time buyers Stamp Duty rates from 1st April 2025:
Example: If first time buyers bought a house for £400,000 in England, you will start paying SDLT at £300,000. Therefore, they would pay 5% on the next £100,000 which means £5,000.
How can you beat the Stamp Duty changes?
April 1st 2025 might seem a long way off. However, you should take heed! You should take heed ESPECIALLY IF YOU ARE FIRST TIME BUYERS!
To qualify for the current Stamp Duty rates, your purchase will have to complete by 31st March 2025.
31st March 2025 is currently (15th September 2024) is 28 weeks away.
The average sales progression time in England is 16-18 weeks. Harlow property is taking around the same amount of time. Sometimes is can be longer.
Therefore, you should start the process by the end of November 2024 at the latest!
This means you have around 10 weeks to find a property and get an offer accepted!!