From 1st April, first-time buyer Stamp Duty relief has dropped from £425,000 to £300,000 while home movers will pay from £125,000 instead of £250,000.
A year ago, the average home mover would have paid £1,433 in stamp duty. Prior to 1 April this year, this cost sat at £2,028, but with the Government failing to extend relief thresholds, the average cost of Stamp Duty now sits at £4,528 – a 216% increase versus last year.
The tax is a handy way for the Government to raise revenue. Generally speaking, everything is rosy for HM Revenue & Customs (HMRC) when sold values and transaction numbers are high, such as during the pandemic years. A report recently released by HMRC, however, revealed the amount of income generated by stamp duty has decreased, and substantially.
According to its own figures, stamp duty receipts tumbled from £15,360 million to £11,615 million between the financial years 2022-2023 and 2023-2024 – a drop of 24%. The downwards trend reflects a property market moving to more subdued levels, with a cost of living crisis, high inflation and a return to mortgage rates in the 5% region pegging back the number of sales. Unsurprisingly, the Government retains the right to change stamp duty thresholds and this is what’s happened from the 1st April.
The proportion of first-time buyers liable to pay stamp duty will double to 42% from April 1st, hitting those buying in London and the South East the hardest
However, 58% of first-time buyer purchases will still pay no stamp duty under property purchases of £300,000 with buyers in the north benefitting the most
Overall these changes are estimated to raise an extra £1.1bn a year in stamp duty for the government.
Majority of homeowners to pay more stamp duty
From the 1st April of 2025, four in every five (83%) homeowners will pay stamp duty on buying a main residence, up from 49% today, as the two percent rate between £125,000 and £250,000 returns. Less than a fifth of homeowners (17%) will pay no stamp duty on purchases below £125,000.
This means that the 49% of homeowner purchases over £250,000 will pay an extra £2,500 in stamp duty from April. The 33% of buyers purchasing between £125,000 and £250,000 will pay two percent on the purchase price up to a maximum of £2,500. Zoopla estimates this will generate an additional £900m in stamp duty.
The biggest jump in buyers paying stamp duty will be in the West Midlands where 66% more sales will pay from April, followed by 55% in the East Midlands and 50% in the North West.
The proportion of first-time buyers paying stamp duty doubles
First-time buyers will pay stamp duty on purchases over £300,000 from April, meaning three in five (58%) will avoid this extra cost of buying. This helps those buying in areas with lower house prices. The number of first-time buyers liable to pay stamp duty will be the lowest in the North East (two percent), Yorkshire and the Humber (three percent), Northern Ireland (five percent) and the North West (five percent).
However, the proportion of first-time buyers liable to pay stamp duty will double to 42% from April, hitting London and South East buyers in the £300,000 and £625,000 range the hardest, with costs of up to £15,000 per purchase. Buying at £350,000 will cost £2,500 per purchase, up from £0 prior. Buying a £500,000 home will cost £10,000 in stamp duty, up from £3,750 previously and buying at £550,000 will jump from £6,250 to £15,000.
Zoopla estimates this will generate an additional £200m in stamp duty alone.
Rates for a single property
You pay SDLT at these rates if, after buying the property, it is the only residential property you own. You usually pay 5% on top of these rates if you own another residential property.
Property or lease premium or transfer value SDLT rate
Stamp duty thresholds from 1st April 2025
Price of property Stamp duty (from 1st April 2025)
- Up to £125,000 Zero
- £125,001 to £250,000 2%
- £250,001 to £925,000 5%
- £925,001 to £1.5 million 10%
- More than £1.5 million 12%
Example:
In 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
If you’re buying your first home
First-time buyers are often referred to as the lifeblood of the property market and they are treated a little differently when it comes to stamp duty. A less expensive rate applies for true homebuying novices who have never owned a property before but the 1st April also brings change.
First-timer buyers will see their current stamp duty discount reduce. Currently, first-timer buyers only pay stamp duty on the portion of a purchase over £425,000. On 1st April 2025, however, this threshold will drop to £300,000.
A rate of 5% will on the portion of a first-time purchase between £300,001 and £500,000. If a first-time buyer purchases a home worth more than £500,000, the first-time buyer stamp duty discount does not apply – a threshold that drops from £625,000 from 1st April 2025.
It’s worth remembering that first-time buyer purchases under £300,000 – a figure that’s more than the national average house price, according to Nationwide – will remain stamp duty free.
Example:
You are a first-time buyer and purchase a property for £500,000. The SDLT you owe will be calculated as:
- 0% on the first £300,000 = £0
- 5% on the remaining £200,000 = £10,000
- total SDLT = £10,000
What about second homes?
If you are buying a second home, you will be charged an extra 5% on top of the standard stamp duty rates.
The 5% surcharge also applies if your main home is abroad and your second home is in the UK, and if your second home is bought through a limited company.
- 5% on properties worth up to £125,000;
- 7% on properties worth from £125,001 to £250,000;
- 10% on properties worth from £250,001 to £925,000;
- 15% on properties worth from £925,001 to £1.5 million; and
- 17% on properties worth more than £1.5 million.
Rates if you’re not a UK resident
If you’re not present in the UK for at least 183 days (6 months) during the 12 months before your purchase you are ‘not a UK resident’ for the purposes of SDLT.
You will face an additional 2% surcharge on top of the standard rates when purchasing residential property in England and Northern Ireland.