As of April 1, 2025, significant changes to Stamp Duty Land Tax (SDLT) will take effect in the UK. If you are considering purchasing property, understanding these updates is crucial to planning your finances and avoiding unexpected costs. This guide provides an overview of the key changes and how they may impact different types of buyers.

1. Key SDLT Rate Changes (Effective April 1, 2025)

• 0% on the portion up to £125,000 (previously £250,000, meaning a reduction in the tax-free allowance).
• 2% on the portion between £125,001 and £250,000 (a newly introduced band).
• 5% on the portion between £250,001 and £925,000 (unchanged).
• Higher rates remain the same for properties over £925,000.

Impact: Properties priced above £125,000 will now incur SDLT, increasing costs for buyers who previously benefited from a larger tax-free threshold.

2. Reduction of the Nil-Rate Band & Its Impact

The nil-rate band reduction means that property buyers over £125,000 will now pay SDLT, increasing their total purchasing costs.

Example: A property worth £250,000, which was previously tax-free, will now incur £2,500 in SDLT.

3. Changes to First-Time Buyer Relief

• The first £300,000 is SDLT-free for properties up to £500,000 (previously £425,000).
• 5% SDLT applies on the portion between £300,001 and £500,000.
• No relief is available for properties above £500,000.

Impact: First-time buyers purchasing mid-priced homes will face higher costs.

4. Impact on Existing Transactions

If your purchase completes on or after April 1, 2025, the new rates will apply regardless of when contracts were exchanged. Buyers should aim to complete transactions before this date to benefit from the current SDLT rates.

5. Buy-to-Let & Second Home Buyers

• Additional properties will incur a 5% surcharge on top of the new SDLT rates.
• Example: A £250,000 buy-to-let property will see SDLT increase from £12,500 to £15,000.

Impact: Higher costs for investors and second-home buyers.

6. Exemptions & Reliefs

Some buyers may still qualify for SDLT reliefs, including:

• Shared ownership schemes: Buyers pay SDLT only on their initial share if below £125,000.
• Charities: Qualifying charitable purchases remain exempt from SDLT.

7. Changes for Properties Below £250,000

Previously, properties under £250,000 were exempt from SDLT. Under the new rules:

• The first £125,000 remains tax-free.
• The portion between £125,001 and £250,000 will incur 2% SDLT.
• Example: A £200,000 property will now cost £1,500 in SDLT.

8. Steps to Reduce SDLT Liability Before the Changes

To minimize SDLT costs, buyers should consider:

• Completing purchases before April 1, 2025 to take advantage of current rates.
• Exploring shared ownership or relief-qualifying schemes to reduce SDLT payments.
• Negotiating purchase prices to keep within specific bands and lower liability.

9. Additional Costs to Budget For

• Higher SDLT payments due to the new 2% band and lower nil-rate threshold.
• Potential knock-on effects on mortgage affordability as budgets are stretched.

Example: A buyer with a £300,000 budget should plan for an extra £2,500 in SDLT.

10. Impact on Overseas Buyers

No changes have been announced for the additional 2% SDLT surcharge applied to non-UK resident buyers. However, overseas buyers will also be subject to the updated bands and rates, increasing their overall SDLT liability.

Summary

The April 2025 SDLT changes will significantly affect all buyers, particularly those purchasing mid-priced homes or investment properties. Planning ahead and understanding these changes will be key to navigating the evolving property market successfully. If you are considering a purchase, now may be the best time to act before the new rates come into effect.

 

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Mark Meyer

CEO

The Meyers Group