Understanding the 2025 Stamp Duty changes

Homebuyers should prepare for higher expenses when Stamp Duty Land Tax changes are implemented in April 2025. Transactions completed after the March 31, 2025 deadline will face the updated rules, which could result in increased tax liabilities.

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

Land Transaction Tax (LTT) rates and bands remain under review, with no changes currently proposed.

What do first-time buyers currently pay?

In England and Northern Ireland, first-time buyers don’t pay stamp duty on homes worth up to £425,000. However, this will change from April 1, 2025, when properties priced between £300,001 and £500,000 will attract a 5% stamp duty charge.

Example:

• Price: £350,000
• Current Stamp Duty: £0
• From April 2025: £2,500

The tax will apply only to the £50,000 above £300,001.

In Wales, there are no reliefs or exemptions for first-time buyers under the Land Transaction Tax (LTT) system, whether buying a primary residence or an investment. Many properties still fall within the £225,000 tax-free threshold.

LTT rates are:

• 0% on up to £225,000.
• 6% on £225,001–£400,000.
• 7.5% on £400,001–£750,000.
• 10% on £750,001–£1.5 million.
• 12% above £1.5 million.

Example:

• Cost of property: £350,000
• LTT paid: £7,500

This is calculated as 6% on the £125,000 above £225,000.

How will the stamp duty changes impact home buyers?

At present, home movers pay no stamp duty for properties costing £250,000 or less. Starting April 2025, homes valued from £125,001 to £250,000 will face a 2% tax rate.

Example:

• Property Price: £350,000
• Current Stamp Duty: £5,000
• After April 2025: £7,500

The new rates include 2% for the portion £125,001–£250,000 (£2,500) and 5% for the amount above £250,000 (£5,000), making £7,500.

In Wales, no stamp duty is charged on the first £225,000 of a property’s price. Rates are 6% on £225,001–£400,000, 7.5% on £400,001–£750,000, 10% on £750,001–£1.5 million, and 12% beyond £1.5 million.

Example:

• House Price: £350,000
• Welsh Land Tax: £7,500

A 6% tax applies to £225,001–£400,000, equaling £7,500.

How do these changes affect those with more than one property?
As of now, property investors and owners of multiple homes pay a 5% stamp duty rate on properties valued between £0 and £250,000. Starting April 1, 2025, this rate will only apply to the first £125,000 of the property value.

Example:

• Property value: £350,000
• Current stamp duty: £5,000
• New stamp duty from April 2025: £25,000

Under the updated rules, the first £125,000 will be taxed at 5% (£6,250), the next £125,000 at 7% (£8,750), and amounts above £250,000 at 10% (£10,000). This brings the total to £25,000.

For Wales, where Land Transaction Tax (LTT) is being reviewed, current rates for owners of multiple properties include: 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 amounts above £1,500,000.

Example:

• Property value: £350,000
• Current LTT for investors: £21,450

This includes 4% on £180,000 (£7,200), 7.5% on £70,000 (£5,250), and 9% on £100,000 (£9,000).

To avoid these higher costs, complete your purchase by March 31, 2025. Contact our team today for a free property valuation and personalised guidance on your next steps.