Stamp Duty Changes 2025: What’s Changing & How It Affects You

While it is true that purchasing a new property can be a rewarding experience, it is important to know that the property market undergo seasonal changes. For example, spring remains the busiest season and the market is sluggish during the winter season. However, one thing is sure that you need to know that stamp duty will affect you in 2025. You may be well aware of the Stamp duty Land Tax which you need to pay to the HMRC whenever you purchase a property or land. So, before we dig deep into stamp duty changes, lets’ know what is changing and how it is going to affect you.

What Are the Changes?

The key changes to Stamp Duty that will become effective from 1 April 2025 include:

Threshold Adjustments: The nil-rate band, which determines how much of a property’s value is exempt from SDLT is revised from £250,000 to £125,000. SDLT will be payable at 2% on the purchase price between £125,001 and £250,000.

Reduction in Nil rates for First-Time Buyers: First-time buyers currently benefit from a higher nil-rate threshold. However, from 1 April 2025, this threshold will decrease from £425,000 to £300,000.

Increase in Tax for Mid-Range Properties: Currently, it is 5% SDLT on the portion from £425,001 to £625,000 but from 1 April 2025, it will be 5% SDLT on the portion from £300,001 to £500,000.

Effect of stamp duty changes

Here are some effects of the stamp duty changes on you.

Higher Up-front Costs

The additional cost of 2% SDLT on the portion between £125,001 and £250,000 during purchasing a property can make finding a home harder for you, especially if you have low income or have a tight budget. You will need to think about this higher upfront cost along with mortgage costs and legal fees.

Increase in Demand for Entry-level Properties

It may happen that in order to avoid SDLT, people will shift their focus to entry -level properties that are below £125,000. This could lead to a sharp increase of price in this segment and even finding an affordable housing will become a nightmare for you.

Increased Pressure to Buy Before the Change

With more people rushing to complete property purchase before 1 April 2025, a short-term high demand may trigger in the UK property market. This can impact you severely by pushing the prices up in early 2025.

Potential Slowdown in the Market

After the change, there could be reduced demand for homes priced between £300,000 and £425,000, as first-time buyers adjust their budgets or delay purchases.

So, if you are planning to buy a property in the UK anytime sooner or later, think of hiring an experienced accountant as the tax rules can be complex. Moreover, consulting an accountant ensures easy navigation of SLDT changes and optimises your strategy for property investment strategy.