Upcoming Changes to Stamp Duty Land Tax (SDLT): What You Need to Know

As we approach April 2025, it is crucial for anyone involved in property transactions to be aware of the significant changes to Stamp Duty Land Tax (SDLT) in England. These adjustments will impact buyers, sellers, and investors alike, so it’s essential to understand what is coming and how it might affect you.

Key Changes Effective from 1st April 2025

The nil rate threshold for SDLT will revert to £125,000 from the current £250,000. This means that SDLT will now be payable on property purchases above £125,000. Given the reduction of the nil rate band, home movers will incur higher SDLT. SDLT will now be charged at 2% on the portion of the property value between £125,001 and £250,000, a potential increase of £2,500 if the purchase price is £250,000 or more.

First-time buyers will see the nil rate threshold decrease from £425,000 to £300,000. The maximum value of a property for which the First-Time Buyer allowance will apply will also reduce from £625,000 to £500,000. From 1st April 2025, SDLT will be charged at 5% on the portion between £300,001 and £500,000, a potential increase of £6,250 if the purchase price is £425,000 or more. First-time buyers should be particularly mindful of this change when planning their property purchase.

Implications for Ongoing Conveyancing Matters

One must account for these increases when budgeting for completion of ongoing conveyancing matters, as the increases may affect transactions that are currently underway if they fail to complete by the end of March.

Scenario:

A property purchase priced at £500,000 is in progress and expected to complete in early April 2025.

If the transaction completes before 1st April 2025:

• • SDLT Payable for a first-time buyer:
    • 0% on the first £425,000 = £0
    • 5% on the next £75,000 = £3,750
  • Total SDLT Payable: £3,750

If the transaction completes on or after 1st April 2025:

• • SDLT Payable for a first-time buyer:
    • 0% on the first £300,000 = £0
    • 5% on the next £200,000 = £10,000
  • Total SDLT Payable: £10,000

Implications for Future Transactions: Planning Ahead

If you are considering purchasing a property, it may be beneficial to complete your transaction before 1st April 2025 to take advantage of the current higher nil rate threshold. Admittedly, with the limited number of weeks remaining until this date, such a timeline may be somewhat ambitious. However, it is worthwhile to consider the following scenario: –

Scenario:

A buyer is planning to purchase a property valued at £150,000.

If the transaction completes before 1st April 2025:

• • SDLT Payable:
    • 0% on £150,000 = £0 (nil rate threshold up to £250,000)
  • Total SDLT Payable: £0

If the transaction completes on or after 1st April 2025:

• • SDLT Payable:
    • 0% on the first £125,000 = £0
    • 2% on the next £25,000 = £500
  • Total SDLT Payable: £500

These examples illustrate how changes in SDLT thresholds could affect different buyers and transactions. It is crucial to plan ahead and consult with your solicitor or tax advisor to understand the financial implications of the changes in stamp duty bands and to gain insight into how these might affect the amount of stamp duty payable on completion of transactions after 1st April 2025, in order to make informed decisions.

At Wilkins Solicitors LLP, we are committed to keeping you informed and helping you navigate these changes smoothly. If you have any questions or need further assistance, please feel free to reach out to us on 01296424681 or by submitting an enquiry via our website at www.wilkinssolicitors.co.uk/contact