Stamp Duty Land Tax (SDLT) is a critical cost for property buyers in England and Northern Ireland. For those planning to buy a property after April 1, 2025, the landscape will look a little different due to changes in SDLT thresholds. Here’s a look at what’s changing and how it might impact your plans.
What is a Stamp Duty Threshold?
The SDLT threshold is the price point at which stamp duty begins to apply. If you purchase a property below the threshold, you don’t pay SDLT; however, for property prices above it, the tax kicks in, calculated as a percentage of the purchase price.
Currently, the SDLT threshold for general residential properties is higher than it will be after April 2025. Here’s how the changes will look:
1. Lower Thresholds for Residential Property Buyers
Current Threshold (until 31 March 2025): £250,000
New Threshold (from 1 April 2025): £125,000
From April 1, 2025, the SDLT threshold for residential properties will drop significantly, from £250,000 to £125,000. This means that properties costing £125,000 or more will now incur SDLT, whereas currently, only properties priced above £250,000 are subject to the tax. For those purchasing homes within the £125,000 - £250,000 range, this means a new SDLT liability where none existed before. Buyers should plan for this additional expense, as it could affect the overall budget needed for buying a home.
2. First-Time Buyers’ Relief – New Thresholds and Price Cap
Current Threshold for First-Time Buyers (until 31 March 2025): £425,000
Maximum Property Price Eligible for Relief: £625,000
New Threshold (from 1 April 2025): £300,000
Maximum Property Price Eligible for Relief: £500,000
First-time buyers benefit from an SDLT relief that allows them to buy a property up to a certain value before the tax is applied. Starting from April 1, 2025, however, both the SDLT-free threshold and the maximum property value eligible for first-time buyer relief will decrease.
With the new SDLT threshold dropping from £425,000 to £300,000 and the overall price cap for relief decreasing from £625,000 to £500,000, first-time buyers in the £300,000 - £425,000 price range will start paying SDLT for the first time. Additionally, those purchasing homes between £500,000 and £625,000 will no longer qualify for first-time buyer relief. These changes could affect affordability for first-time buyers purchasing in higher price ranges.
What Does This Mean for You?
1. Higher SDLT on Residential Property Purchases: Buyers of residential properties, particularly those in the £125,000 - £250,000 range, will need to budget for SDLT after April 2025, as this price range will no longer be exempt.
2. First-Time Buyers Face a Tighter Price Cap: For first-time buyers, the threshold reductions mean that purchasing a higher-value home may require more upfront costs for SDLT. The tighter eligibility range could also impact how much house first-time buyers can afford within their budgets.
Planning Ahead
With these SDLT changes on the horizon, property buyers may want to consider their purchase timing to take advantage of the current thresholds. Whether you're a first-time buyer or looking for a residential property, understanding how SDLT affects your budget is essential for a smooth purchase process.
If you’re unsure how the new thresholds might impact your budget or have specific questions about SDLT, consulting a financial advisor or mortgage specialist can provide tailored guidance.
What is a Stamp Duty Threshold?
The SDLT threshold is the price point at which stamp duty begins to apply. If you purchase a property below the threshold, you don’t pay SDLT; however, for property prices above it, the tax kicks in, calculated as a percentage of the purchase price.
Currently, the SDLT threshold for general residential properties is higher than it will be after April 2025. Here’s how the changes will look:
1. Lower Thresholds for Residential Property Buyers
Current Threshold (until 31 March 2025): £250,000
New Threshold (from 1 April 2025): £125,000
From April 1, 2025, the SDLT threshold for residential properties will drop significantly, from £250,000 to £125,000. This means that properties costing £125,000 or more will now incur SDLT, whereas currently, only properties priced above £250,000 are subject to the tax. For those purchasing homes within the £125,000 - £250,000 range, this means a new SDLT liability where none existed before. Buyers should plan for this additional expense, as it could affect the overall budget needed for buying a home.
2. First-Time Buyers’ Relief – New Thresholds and Price Cap
Current Threshold for First-Time Buyers (until 31 March 2025): £425,000
Maximum Property Price Eligible for Relief: £625,000
New Threshold (from 1 April 2025): £300,000
Maximum Property Price Eligible for Relief: £500,000
First-time buyers benefit from an SDLT relief that allows them to buy a property up to a certain value before the tax is applied. Starting from April 1, 2025, however, both the SDLT-free threshold and the maximum property value eligible for first-time buyer relief will decrease.
With the new SDLT threshold dropping from £425,000 to £300,000 and the overall price cap for relief decreasing from £625,000 to £500,000, first-time buyers in the £300,000 - £425,000 price range will start paying SDLT for the first time. Additionally, those purchasing homes between £500,000 and £625,000 will no longer qualify for first-time buyer relief. These changes could affect affordability for first-time buyers purchasing in higher price ranges.
What Does This Mean for You?
1. Higher SDLT on Residential Property Purchases: Buyers of residential properties, particularly those in the £125,000 - £250,000 range, will need to budget for SDLT after April 2025, as this price range will no longer be exempt.
2. First-Time Buyers Face a Tighter Price Cap: For first-time buyers, the threshold reductions mean that purchasing a higher-value home may require more upfront costs for SDLT. The tighter eligibility range could also impact how much house first-time buyers can afford within their budgets.
Planning Ahead
With these SDLT changes on the horizon, property buyers may want to consider their purchase timing to take advantage of the current thresholds. Whether you're a first-time buyer or looking for a residential property, understanding how SDLT affects your budget is essential for a smooth purchase process.
If you’re unsure how the new thresholds might impact your budget or have specific questions about SDLT, consulting a financial advisor or mortgage specialist can provide tailored guidance.
Stay informed, plan ahead, and happy house hunting.
Kat Chiva Dip FA, CeMap, CeRER
Haverfords Director
