Stamp duty changes from April 2025
In September 2022 the Conservative government cut the Stamp Duty Land Tax (SDLT) rates in England and Northern Ireland, providing relief for those purchasing a home.
At the time, the aim was to support the housing market and those who were hoping to get on the property ladder, as borrowing costs were edging up and the Help to Buy scheme was due to close to new applicants the next month. While the cut was originally thought to be permanent, it was later announced that it would in fact be temporary and revert to previous rates from 1st April 2025.
From 1st April 2025 the following changes will be made:
- The nil rate threshold of £250,000 will revert back to £125,000
- The nil rate threshold for first time buyers of £425,000 will revert back to £300,000
- The maximum purchase price to claim for First-time Buyers Relief (a reduced SDLT rate) of £625,000 will revert back to £500,000
These stamp duty changes are expected to have the most significant impact on first-time buyers. This is due to both the reduction in the nil-rate threshold and the lowered maximum purchase price qualifying for relief. The impact will also vary regionally, with London property buyers likely to experience the most substantial stamp duty increases.
For example, a first-time buyer who currently purchases a home for £425,001 will pay no stamp duty however post-March 2025 this will rise to £6,250 on the same purchase. For a purchaser who is not a first-time buyer the tax will move from £8,750 on this purchase, to £11,250, an increase of £2,500.
The table below illustrates the tax changes in selected parts of the country, including first-time buyers and average purchasers.
| London | West Midlands | North West | South West | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Average prices as of October 2024) | House prices | Current SDLT due | SDLT post April 2025 | House Prices | Current SDLT due | SDLT post April 2025 | House prices | Current SDLT due | SDLT post April 2025 | House prices | Current SDLT due | SDLT post April 2025 |
| Average first-time buyer purchase | £451,282 | £1,314 | £7,564 | £215,204 | £0 | £0 | £191,328 | £0 | £0 | £268,478 | £0 | £0 |
| Average purchase | £519,579 | £13,479 | £15,979 | £256,384 | £319 | £2,819 | £225,360 | £0 | £2,007 | £324,709 | £3,735 | £6,235 |
| Theoretical first-time buyer purchase | £460,000 | £1,750 | £8,000 | £460,000 | £1,750 | £8,000 | £460,000 | £1,750 | £8,000 | £460,000 | £1,750 | £8,000 |
| Theoretical purchase | £460,000 | £10,500 | £13,000 | £460,000 | £10,500 | £13,000 | £460,000 | £10,500 | £13,000 | £460,000 | £10,500 | £13,000 |
Clearly some purchase prices and some buyer categories (first time buyers particularly) are going to feel the impact of these changes more than others, with almost all purchases impacted (bar those under £125,000). With that, we expect there will be a noticeable spike in activity during February and March as buyers rush to complete transactions before the deadline. However, the effect is unlikely to be as pronounced as with previous changes to stamp duty rates as the change has been known for some time.
For the first three months of 2025, market activity will probably be ‘artificially’ inflated by buyers rushing to meet the deadline. Conversely, the following two to three months may exhibit dampened demand as the initial rush subsides. This period of distorted activity will impact our ability to accurately gauge true market demand in the first half of 2025.
