What is Stamp Duty?

Stamp Duty Land Tax (SDLT) is due in England if you purchase a residential property or land.

You pay Stamp Duty when you:

• buy a freehold property
• buy a new or existing leasehold
• buy a property through a shared ownership scheme
• take on a mortgage or buy a share in a house

The amount of stamp duty you owe depends on the cost of the property, whether it will be used for residential purposes, and whether you own any other property and also whether you are a first time buyer.

 

How much is it at present?

At the moment, buyers of homes worth less than £250,000 don’t pay stamp duty. This was doubled from £125,000 under Liz Truss’s mini-Budget in September 2022.

The threshold is £425,000 for those buying their first property (first time buyers) if they are buying a property worth £625,000 or less. This was raised from £300,000 as part of the mini-Budget.

These thresholds will end on 31^st March 2025.

If you own more than one property the above rates are not applicable and you will be subject to the higher rates as amended on 31^st October 2024 when the higher rate increased from 3% to 5%.

 

Thresholds from 1^st April 2025

The threshold will be lowered so that homes over £125,000 will be subject to stamp duty as shown below;

Property or lease premium or transfer value	SDLT rate
Up to £125,000	Zero
The next £125,000 (the portion from £125,001 to £250,000)	2%
The next £675,000 (the portion from £250,001 to £925,000)	5%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%
The remaining amount (the portion above £1.5 million)	12%

 

Worked Example;

Before 1^st April 2025 you buy a house for £295,000. The SDLT you owe will be calculated as follows:

• 0% on the first £250,000 = £0
• 5% on the above £250,000 = £2,250
• total SDLT = £2,250

From 1^st April 2025 you buy a house for £295,000. The SDLT you owe will be calculated as follows:

• 0% on the first £125,000 = £0
• 2% on the second £125,000 = £2,500
• 5% on the final £45,000 = £2,250
• total SDLT = £4,750

The threshold for first time buyers buying a residential property worth £500,000 or less will be reduced to £300,000.

The reasoning behind these changes is to increase revenue for the government. Stamp Duty Land Tax (SDLT) raised £15.4bn for the government in the 2022/23 financial year, external, a 9% increase on the £14.1bn raised in 2021/22.

Should you be looking to move home and wish to discuss your potential stamp duty liability and how these changes may affect you or should you wish to move before 1^st April 2025 please do not hesitate to contact myself or one of our team.