2025 Stamp Duty Changes
Pendle Hill Properties' Managing Director, Andrew Turner, gives a brief overview of stamp duty changes coming early 2025
What are the changes?
Back in September 2022, the Government increased the 0% stamp duty land tax threshold band on residential properties from £125,000 to £250,000 with the aim to support the housing market and the hundreds of thousands of jobs and businesses which rely on it. The intention was to lower the upfront costs of moving home and support those looking to get on and up the housing ladder however, this was only a temporary measure and the government announced that this measure will end on 31st March 2025 with the threshold going back down to £125,000 on 1st April 2025 as part of its commitment to fiscal responsibility and ensuring trust and confidence in our national finances.
This means that if you want to take advantage of this saving then you need to be thinking of finding somewhere to buy very soon especially as transactions are currently taking some time to go through particularly where there is a chain involved.
Stamp Duty Land Tax which is also referred to as Stamp Duty has seen many changes over recent years. Not much attention has been made though to the reversion of the stamp duty land tax threshold from £250,000 to £125,000 on 1st April 2025 and this deadline is creeping up.
With the cost-of-living crisis and increased mortgage rates from what they were a few years ago every penny saved helps. If you are looking at selling before you buy many sellers are finding that it is taking longer to find a buyer which will have a knock-on effect as to when you will be able to complete.
As with other stamp duty deadlines we as solicitors are going to be inundated with requests to complete by 31st March 2025 because of the potential saving in stamp duty land tax. It may well be too that removal firms will be booked up and not able to accommodate everyone wanting to move to take advantage of this saving.
How much will I save?
Currently, a buyer of a £250,000 home pays £0 in Stamp Duty, but if they were to buy after March 2025, they would be looking at a Stamp Duty bill of £2,500. (There may be an additional 5% of the purchase price payable on top though if the property that you are buying is an additional property for you or anyone that you are married to and is not a replacement main residence for any property that you are selling.)
For those eyeing a £500,000 property, the current Stamp Duty rate is £12,500, but post-March 2025, it will increase to £15,000. (As above there may be an additional 5% of the purchase price payable on top though if the property that you are buying is an additional property for you or anyone that you are married to and is not a replacement main residence for any property that you are selling.)
These numbers highlight the significance of acting before the rates go back up.
It is also important to note that the amount payable depends on the day you complete your transaction; if you agreed to buy before 31st March 2025, but completion does not happen until after 31st March 2025, then the increased rates will apply.
First-time Buyers Relief
The nil-rate threshold for First Time Buyers’ Relief was also temporarily increased in 2022 from £300,000 to £425,000 and the maximum property value that is eligible for First Time Buyers’ Relief was increased to £625,000 from £500,000. On 1st April 2025 the threshold will revert back to £300,000 and the maximum property value will revert back to £500,000.