Stamp Duty 2025: What UK Homebuyers Need To Know

As of 1st April 2025, significant changes to Stamp Duty Land Tax (SDLT) have come into effect in England and Northern Ireland, impacting first-time buyers, home movers, investors, and remortgagers. Understanding these updates is crucial for anyone involved in property transactions.

Revised Stamp Duty Rates from April 2025

The temporary SDLT thresholds introduced in 2022 have now reverted to their previous levels:

Standard Residential Purchases:
- Up to £125,000: 0%
- £125,001 – £250,000: 2%
- £250,001 – £925,000: 5%
- £925,001 – £1.5 million: 10%
- Above £1.5 million: 12%
First-Time Buyers:
- Up to £300,000: 0%
- £300,001 – £500,000: 5%
- Above £500,000: Standard rates apply; no first-time buyer relief

Note: Previously, first-time buyers benefited from a 0% rate up to £425,000, with relief available on properties up to £625,000.

Impact of Stamp Duty Different Buyer Groups

First-Time Buyers:

The reduction in the nil-rate band from £425,000 to £300,000 means that first-time buyers purchasing homes between £300,001 and £500,000 will now incur a 5% SDLT on the amount above £300,000. For instance, a £400,000 property would attract £5,000 in stamp duty.

Home Movers:

With the nil-rate threshold reverting to £125,000, home movers will now pay 2% on the portion between £125,001 and £250,000, and 5% on the portion between £250,001 and £925,000. This change increases the tax liability for many buyers.

Investors and Second Home Buyers:

The additional 5% surcharge on top of standard rates continues to apply, making property investments more costly. For example, purchasing a £300,000 second home would now incur £15,000 in SDLT.

Remortgagers:

While remortgaging an existing property doesn’t typically involve SDLT, those considering capital raising for additional property purchases should factor in the increased stamp duty costs.

Market Implications

The anticipation of these changes led to a surge in property transactions in early 2025, as buyers aimed to complete purchases before the new rates took effect. March 2025 saw a 50% spike in mortgage completions, making it one of the busiest months for lenders.

In May 2025, the average asking price for homes in Great Britain reached a record high of £379,517, marking a second consecutive monthly peak.

Key Takeaways

Plan Ahead: Understanding the new SDLT rates is essential for budgeting your property purchase.
Seek Professional Advice: Consult with mortgage advisors and solicitors to navigate the complexities of stamp duty and explore potential reliefs.
Utilize Tools: Use the MoneyHelper Stamp Duty Calculator to estimate your SDLT liability.

Staying informed about these changes ensures better financial planning and decision-making in the evolving UK property market.