There is a stamp duty land tax (SDLT) deadline on the horizon – from 1 April 2025, there are changes to both the residential SDLT threshold and that applying to first-time buyers. Completing a purchase before that date could save the buyer £2,500 in SDLT. For a first-time buyer, the potential savings are more.
Residential SDLT threshold
The SDLT threshold was temporarily increased from £125,000 to £250,000 from 23 September 2022. It reverts to £125,000 from 1 April 2025. Before that date, purchasers pay no SDLT on the first £250,000 of the consideration. However, from 1 April 2025, while no SDLT will be payable on the first £125,000, SDLT is charged on the next £125,000 at 2%.
The rates are shown in the tables below.
Up to 31 March 2025
| The remaining consideration (the portion above £1.5 million) | SDLT rates |
| Up to £250,000 | Zero |
| Next £675,000 (the portion from £250,001 to £925,000) | 5% |
| Next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| Remaining consideration (the portion above £1.5 million) | 12% |
From 1 April 2025
| The remaining consideration (the portion above £1.5 million) | SDLT rates |
| Up to £125,000 | Zero |
| Next £125,000 (the portion from £125,001 to £250,000) | 2% |
| Next £675,000 (the portion from £250,001 to £925,000) | 5% |
| Next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| Remaining consideration (the portion above £1.5 million) | 12% |
Example 1
Anna is in the process of moving home and is buying a new home for £500,000. If her purchase completes on or before 31 March 2025, she will pay SDLT of £12,500. However, if completion does not take place until on or after 1 April 2025, her SDLT bill will increase to £15,000.
First-time buyers
For first-time buyers, the rush to complete on or before 31 March 2025 is particularly acute, and delays resulting in completion after this date could increase their SDLT bill considerably. First-time buyers purchasing a home costing between £500,000 and £625,000 will only benefit from the first-time buyer threshold if they complete on or before 31 March 2025.
Prior to 31 March 2025, first-time buyers purchasing a property costing £625,000 or less pay no SDLT on the first £425,000 and 5% on the portion over £425,000. From 1 April 2025, the first-time buyer threshold is reduced to £300,000 and only applies where the amount that they pay for the property is £500,000 or less. From that date, there is nothing to pay on the first £300,000. Where the price exceeds £300,000 (up to £500,000), the remainder is liable to SDLT at 5%.
Where a property purchased by a first-time buyer is more than the first-time buyer’s ceiling price (£625,000 on and before 31 March 2025 and £500,000 from 1 April 2025), the normal residential rates and thresholds apply.
Example 2
Ben is a first-time buyer and is in the process of purchasing a flat costing £400,000. If the purchase is completed before 1 April 2025, he will pay no SDLT. However, if it is completed on or after that date, he must pay SDLT of £5,000 (£100,000 @ 5%).
Example 3
Caitlyn is purchasing her first home, a house costing £600,000. If she completes on or before 31 March 2025, she will benefit from the first-time buyer threshold and pay SDLT of £8,750 (£600,000 – £425,000) @ 5%).
However, if she completes on or after 1 April 2025, she will not benefit from the first-time buyer threshold and will pay SDLT at the usual residential rates. Her SDLT bill will be £20,000 ((£125,000 @ 2%) + (£350,000 @ 5%). Missing the deadline will cost her £11,250.
Investment buyers
Purchasers buying a second or subsequent residential property and who are not exchanging their main residence pay a supplement of 5% where the price is £40,000 or more. Prior to 1 April 2025, they will pay 5% on the first £250,000, whereas from 1 April 2025, they will pay 5% on the first £125,000 and 7% on the next £125,000. Where the consideration exceeds £250,000, SDLT is payable at the residential rates plus 5% on the excess.
Beat the deadline
Missing the deadline will prove costly. Buyers should, as far as they are able, ensure that they have all their ducks in a row to meet a completion date of 31 March 2025 or earlier.
You might also like to read: When a dwelling is uninhabitable – SDLT
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