The current stamp duty rules for first-time buyers are set to change… very soon. This could mean buyers spend thousands more on tax if they move after 31st March 2025.
Let us have a look at what is about to change and what it could mean for your finances.
Stamp Duty Land Tax (SDLT) or simply ‘stamp duty’ is a tax paid when buying a property in England or Northern Ireland. It is calculated as a percentage of the amount paid for the property.
Stamp duty relief for first time buyers was introduced in November 2017, lowering the amount of tax paid by this group with the goal of helping them get onto the property ladder. In September 2022, the government increased the 0% stamp duty threshold from £300,000 to £425,000.
At the moment, first time buyers are eligible for stamp duty relief if the property costs up to £625,000. They pay no tax on the first £425,000 and 5% tax on the remaining value.
If a property costs more than £625,000, first time buyer relief does not apply and you must pay the standard rate of stamp duty.
After 31st March 2025, the rules are changing. First time buyers will be eligible for tax duty relief on properties that cost up to £500,000. They will pay no tax on the first £300,000 and 5% on the remaining value.
If a property costs more than £500,000, first time buyer relief will not apply and you will pay the standard rate of stamp duty.
In summary:
| Up to 31st March 2025 | 1st April 2025 onwards | |
| First time buyer stamp duty relief applies
| On properties that cost <£625,000 | On properties that cost <£500,000 |
| No stamp duty paid | On properties that cost <£425,000 | On properties that cost <£300,000 |
| 5% stamp duty paid | On the portion of the property £425,000 – £625,000 | On the portion of the property £300,000 – £500,000 |
| Example 1: a first-time buyer purchasing a £600,000 property | 0% tax on the first £425,000 5% tax on the remaining £175,000 = £8750 SDLT | Ineligible for tax relief, standard rates apply: 0% tax on the first £125,000 2% tax on the amount £125,001 to £250,000 5% tax on the amount £250,001 to £600,000 = £20,000 SDLT |
| Example 2: A first-time buyer purchasing a £450,000 property
| 0% tax on the first £425,000 5% tax on the remaining £25,000 = £1250 SDLT | 0% tax on the first £300,000 5% tax on the remaining £150,000 = £7500 SDLT |
The new rules will make buying a first home more expensive for many. The tax thresholds are lowering, meaning cheaper properties are eligible for taxation, and a greater proportion of the property’s cost will be taxed.
No. The stamp duty changes will not affect those who have completed their purchase before 31st March 2025.
If you are thinking of moving as a first-time buyer, now is the moment! Right now, you can really make the most of your money:
Remember that the average time it takes to complete a purchase is 12-16 weeks, so you need to begin the process before Christmas 2024 to avoid those tax changes and spending more than you have to.
If you want to get on the property ladder and make the most of your money, please get in touch. At Charters, we guide first time buyers through the whole property-purchase procedure and can help you find your dream home. We appreciate the urgency of completing transactions before the 31st of March and will work hard at every step to help you beat this deadline.
Our friendly, knowledgeable team and catalogue of fantastic properties are at your disposal. Please get in touch to find out more.
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