In September 2022 the government granted a temporary increase to the thresholds for Stamp Duty Land Tax (SDLT) for residential properties which is due to expire 31st March 2025. This was welcomed by homeowners, saving them thousands of pounds on their upcoming move.
The current residential rates for SDLT are:
0% up to £250,000
5% between £250,001 and £925,000
10% between £925,001 and £1,500,000
12% above £1,500,001
An example of a residential purchase:
You purchase a property before 31st March 2025 for the value of £295,000. The SDLT will be calculated as follows:
0% on the first £250,000 = £0.00
5% of the final £45,000 = £2,500.00
Total SDLT before 31st March 2025 = £2,500
From 31st March 2025, several changes are to be made to SDLT, and it is unclear at this time whether any further amendments will be made. The following changes have been announced:
- Nil rate will revert back to the previous level of a property value of up to £125,000
- Nil rate for First Time Buyers will revert back to the previous level of a property value up to £300,000
- The maximum purchase price for a first time buyer to claim relief will be reduced from £650,000 to £500,000.
From 31st March 2025 the residential rates are:
0% up to £125,000
2% between £125,001 and £250,000
5% between £250,001 and £950,000
10% between £950,001 and £1,500,000
12% above £1,500,001
An example of a residential purchase:
You purchase a property after 31st March 2025 for the value of £295,000. The SDLT will be calculated as follows:
0% on the first £125,000 = £0.00
2% of the second £125,000 – £2,500.00
5% of the final £45,000 = £2,250.00
Total SDLT after 31st March 2025 = £4,750.00
It is important to remember SDLT is calculated from the date of completion and NOT the date of exchange, therefore should you complete before 31st March 2025 you will benefit from the current SDLT thresholds.
Completing before the change in March could save a buyer on average £2,500.
The changes due to be implemented will have a significant impact on First Time Buyers. As the threshold for first time buyers will decrease, this could mean that a first-time buyer may have to wait longer to get on the property ladder.
Being aware of these changes and understanding the future rates of SDLT may assist you in your future planning and allow you to take advantage (if possible) of savings before the changes. For the latest updates on SDLT, please visit Stamp Duty Land Tax: Overview – GOV.UK
** Please note that we are not able to offer specific tax advice and should you have any queries in respect of this, we would advise that you seek tax advice form a taxation specialist **
