2025 Stamp Duty changes: How New Rules Will Affect Property Transactions

What is Stamp Duty?

• Stamp Duty Land Tax (SDLT) is a mandatory tax that is applied when purchasing a property or land in England and Northern Ireland
• Land Transaction Tax (LTT) is a mandatory tax applied when purchasing a property or land in Wales

To provide certainty to taxpayers, Land Transaction Tax (LTT) rates and bands remain under review, with no changes currently proposed.

How much will first-time buyers pay?

Up until 1 April 2025, in England and Northern Ireland, first-time buyers were exempt from paying stamp duty on homes priced up to £425,000. However, starting April 1, 2025, a 5% stamp duty rate will apply to properties priced between £300,001 and £500,000.

Example:

• Purchase price: £350,000
• Stamp Duty before 1 April (first-time buyers): £0
• Stamp Duty after April 1, 2025: £2,500

From April 2025, the 5% tax will only apply to the portion of the property’s price exceeding £300,001. In this case, that’s £50,000.

In Wales, the rules differ. Unlike in England, first-time buyers don’t receive any specific Land Transaction Tax (LTT) exemptions or relief, whether purchasing a main home or a buy-to-let property. However, many properties for first-time buyers fall within or just above the £225,000 zero-rate threshold.

For Welsh first-time buyers:

• The first £225,000 of the purchase price is tax-free.
• Tax is charged at 6% on the portion between £225,001 and £400,000.
• Additional rates apply: 7.5% on £400,001–£750,000, 10% on £750,001–£1.5 million, and 12% on amounts above £1.5 million.

Example:

• Purchase price: £350,000
• Stamp Duty for first-time buyers: £7,500

This is calculated as 6% on the £125,000 between £225,000 and £350,000, totaling £7,500. While the LTT rates are under review, this structure remains unchanged.

What do the changes mean for buying or selling your home?

Previously, those moving house didn't pay stamp duty on properties valued at £250,000 or less. However, from April 1, 2025, properties priced between £125,001 and £250,000 will be taxed at a 2% stamp duty rate.

Example Calculation:

• Price: £350,000
• Stamp duty before April: £5,000
• From April 1, 2025: £7,500

After April 2025, 2% will be charged on the portion of the price from £125,001 to £250,000 (£2,500). A 5% rate will apply to the amount between £250,001 and £925,000 (£5,000). In total, this equals £7,500.

In Wales, no stamp duty is paid on the first £225,000 of a property. Rates are then 6% on £225,001 to £400,000, 7.5% on £400,001 to £750,000, 10% on £750,001 to £1.5 million, and 12% for amounts over £1.5 million.

Example Calculation:

• Price: £350,000
• LTT (Wales): £7,500

Here, 6% is charged on the portion from £225,001 to £400,000, giving a total of £7,500.

How will these updates affect property investors and owners of multiple homes?
Previously, investors and owners of additional properties paid 5% stamp duty on homes priced between £0 and £250,000. Starting April 1, 2025, this 5% rate will only apply to the first £125,000 of the property value.

For example:

• Home price: £350,000
• Stamp duty for investors before April 2025: £5,000
• From April 2025: £25,000

Under the new system, 5% will be charged on the first £125,000 (£6,250), 7% on the amount between £125,001 and £250,000 (£8,750), and 10% on the portion exceeding £250,000 (£10,000). This totals £25,000.

In Wales, Land Transaction Tax (LTT) is still under review. Currently, for multiple property owners, the rates are 4% on the first £180,000, 7.5% on £180,001 to £250,000, 9% on £250,001 to £400,000, 11.5% on £400,001 to £750,000, 14% on £750,001 to £1,500,000, and 16% for anything above £1,500,000.

Example calculation:

• Home price: £350,000
• Current LTT for investors: £21,450

This calculation includes 4% on £180,000 (£7,200), 7.5% on the next £70,000 (£5,250), and 9% on the remaining £100,000 (£9,000), totaling £21,450.

How will these updates affect property investors and owners of multiple homes?

Before 1 April 2025, investors and owners of additional properties paid 5% stamp duty on homes priced between £0 and £250,000. Starting April 1, 2025, this 5% rate will only apply to the first £125,000 of the property value.

For example:

• Home price: £350,000
• Previous stamp duty for investors: £5,000
• From April 2025: £25,000

Under the new system, 5% will be charged on the first £125,000 (£6,250), 7% on the amount between £125,001 and £250,000 (£8,750), and 10% on the portion exceeding £250,000 (£10,000). This totals £25,000.

If you are looking to buy a property this spring, start today by booking a free property valuation today with our knowledgeable team to get started.