LEGAL
All change for Stamp Duty Stamp Duty Rates will increase significantly on 31 March 2025 as the temporary thresholds introduced in September 2022 will end. Coralie Phelan, Partner and Head of Resales and Staircasing at Prince Evans Solicitors LLP, explains how the changes will affect first time buyers
WHAT IS STAMP DUTY? Stamp Duty Land Tax (SDLT) is a tax a buyer pays when they purchase a flat or a house or other land and buildings in the UK. It is calculated with reference to the consideration or purchase price.
HOW IS STAMP DUTY PAID?
It is paid by the buyer in one lump sum on completion of a purchase. It is paid to HM Revenue and Customs on completion. It is generally calculated by your conveyancer and added to your completion statement. The tax is paid to your conveyancer before completion.
WHY IS STAMP DUTY CHANGING?
which was its rate before the September 2022 announcement. The pre and post 31 March 2025 rates and the difference in threshold are set out in the table below. HOW WILL THE CHANGES AFFECT FIRST TIME BUYERS It will make it harder for first time buyers as follows: 9 First time buyers will see the greatest impact due to the reduction in the nil rate threshold 9 The maximum relief limit could make it harder for first time buyers to get on the property ladder 9 It may take longer for them to accrue sufficient funds to do so
9 Higher overall costs – for homes priced above these thresholds, first time buyers will face higher up-front costs making it even more expensive to get on the property ladder 9 Smaller maximum purchase price – the maximum home value for which first time buyers can claim relief will decrease from £625,000 to £500,000 9 If a property costs more than £500,000, first time buyers won’t qualify for any relief and will need to pay standard SDLT rates.
The measure announced by the Conservative Government in September 2022, which raised the nil rate threshold for SDLT, was announced firstly as a permanent change, however the Autumn Statement 2022 confirmed this as a temporary measure. It is crucial that you are aware of the obligation to pay SDLT and how these changes affect you as a first time buyer.
WHAT IS CHANGING?
HOW CAN I FIND OUT MORE INFORMATION?
For first time buyers, there is no Stamp Duty due on homes up to £425,000 until the 31 March 2025 when the threshold will be drastically reduced to £300,000. The nil-rate band threshold will drop back to £125,000,
See the HMRC website – gov.uk/stamp- duty-land-tax which provides useful information on current and new rates. It is also particularly useful for information regarding how Stamp Duty is calculated on shared ownership properties. In summary, you should ensure you instruct a conveyancer with experience who can advise you on the amount of SDLT payable given the changes outlined above. At Prince Evans we have qualified solicitors advising on residential and shared ownership resales and staircasing conveyancing and we are happy to discuss any questions you have before instructing a conveyancer. Email coralie.phelan@prince-evens.co.uk or phone us on 020 8567 3477
STAMP DUTY RATES PRE AND POST 31 MARCH 2025 INCREASE
Rates to 31 March 2025
Rates from 1 April 2025
Difference
£250,000
£125,000
£125,000
£425,000 for first time buyers for properties worth up to £625,000
£300,000 for first time buyers for properties worth up to £500,000
£125,000 for threshold and £125,000 for purchase price cap
The rates increase on 1 April 2025 meaning any transaction completing on or after this date will be subject to the new higher rates. The key date or effective date is the date of completion not exchange of contracts.
102 First Time Buyer February/March 2025
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