Stamp Duty Land Tax: current rates and April 2025 changes

If you are buying property in England or Northern Ireland, you will most likely be liable to pay Stamp Duty Land Tax, or transaction tax. In Scotland Land and Buildings Transaction Tax applies instead, and in Wales Land Transaction Tax. This levy is a major expense that every prospective property owner must consider when buying a property. Your solicitor or conveyancer usually files the SDLT return and pays the tax for you; it must be paid within 14 days of completion. On 1 April 2025, Stamp Duty Land Tax increased. By how much exactly? Who is most affected by these changes? Let’s find out!

What is Stamp Duty Land Tax?

Stamp Duty Land Tax (SDLT) is a tax paid when you buy residential or non-residential property or land in England or Northern Ireland above certain price thresholds. SDLT is charged where the price is above the relevant threshold, whatever the type of property, how the purchase is funded or how long the seller owned it:

• The nature of the property being purchased - both commercial and residential premises are taxable. It is also irrelevant whether the subject of the transaction is a house or a flat;

• The source of the funds - whether the funds for the purchase came from a mortgage or your savings account, tax will be charged;

• The length of time the property has been in the hands of the previous owner - The length of time the property belonged to someone else is irrelevant.

What affects the tax rate?

First and foremost, the value of the property. As a general rule, the more expensive the house you buy, the higher the amount of Stamp Duty Land Tax due will be. You will find a list of rates later in this article, but the general rule of thumb is that more expensive buildings are disproportionately more taxed than cheap ones.

The amount of Stamp Duty Land Tax also depends on the buyer’s housing situation - the regulations distinguish between categories of buyers such as:

• Persons with First Time Buyer status;

• People buying a property for investment purposes;

• People moving house;

• Non-UK residents;

• Companies and legal entities;

• Joint buyers.

It is worth bearing in mind that there are also other costs of purchasing a home. Stamp Duty Land Tax is often one of the largest purchase costs, but it is worth factoring in any commission, conveyancing or survey costs.

Stamp Duty Land Tax rates until 31 March 2025

Standard rates until 31 March 2025 (if you will own only one residential property)

Until 31 March 2025, the standard SDLT rates were as follows:

Higher rates for additional properties until 31 March 2025

From 31 October 2024 to 31 March 2025, if you would own more than one residential property after the purchase, the higher rates were:

The higher rates are a surcharge on top of the standard rates. If the new property replaces your main residence and you sell your previous main residence within 3 years of buying the new one, you can usually claim a refund of the higher-rates part of the SDLT. The claim must be made within 12 months of the sale or of the filing date of your SDLT return, whichever is later.

First-time buyer relief until 31 March 2025

Those with First Time Buyer status paid lower rates, as shown in the table below:

If you bought a property more expensive than £625,000, the relief did not apply.

Current Stamp Duty Land Tax rates (from 1 April 2025)

Standard rates from 1 April 2025 (if you will own only one residential property)

The basic Stamp Duty Land Tax rates are as follows:

As you can easily see, the fundamental change is a reduction in the amount at which the tax starts to accrue. The change affects every purchase above £125,000 at standard rates; above £250,000 the extra tax is £2,500. You can compare these thresholds with current property prices in the UK.

Higher rates for additional properties from 1 April 2025

The change did not affect the surcharge - if you will own more than one residential property after the purchase, you usually still pay 5% on top of each standard rate, as this table illustrates:

Non-UK residents

If you are not a UK resident for SDLT purposes (broadly, you were not in the UK for at least 183 days in the 12 months before buying), you will usually pay a 2% surcharge on residential property in England or Northern Ireland.

First-time buyer relief from 1 April 2025

The thresholds for First Time Buyer relief have also changed significantly. The tax-free amount changed from £425,000 to £300,000 and the 5% rate now ends at £500,000 rather than £625,000 as before. This is a very big jump compared to the previous thresholds. If the price is above £500,000, first-time buyer relief does not apply.

Which rates applied depended on the effective date of the transaction, usually its completion date: purchases completing on or after 1 April 2025 were taxed at the new rates, even if the purchase agreement was signed earlier.

Examples of tax calculation according to basic thresholds

The calculation of Stamp Duty Land Tax for an individual without First Time Buyer status on the purchase of a £200,000 property is as follows:

The first part of the tax-free amount is £125,000. On the remaining £75,000, the tax is 2%, or £1,500. This is the full amount of tax to be paid in this case.

For properties with a value of £300,000, the case is slightly different. The part of the value between £125,000 and £250,000, generates a total of £2,500 in tax. To this amount must be added the remainder, or £50,000, which falls within the 5% tax threshold and generates a further £2,500. The total tax to be paid in this case is £5,000. This is twice the £2,500 that would have been due under the thresholds that applied until 31 March 2025.

Examples of tax calculation for people with First Time Buyer status

If a person covered by the relief purchases a property worth £200,000, they will pay no SDLT at all. However, if it cost £400,000, they should pay tax on £100,000, at a rate of 5%. Then its total amount would be £5,000.

What about if you buy a property worth £600,000? First-time buyer relief does not apply because the price is above £500,000, so standard rates apply to the whole price: 2% on £125,000 (£2,500) plus 5% on £350,000 (£17,500), a total of £20,000. Under the relief that applied until 31 March 2025 (0% to £425,000, 5% to £625,000), the tax would have been £8,750.

You can check your own figure with HMRC’s Stamp Duty Land Tax calculator.

Changes from 31 October 2024

The changes concerned the amount of tax mainly for investors and companies. From 31 October 2024, the following changes took effect:

• The surcharge for additional residential properties rose from 3% to 5% on top of the standard rates;

• The single rate for certain companies and other non-natural persons buying a dwelling for more than £500,000 rose from 15% to 17%.

How do the changes affect those investing in property?

As we mentioned earlier, legal entities and companies investing in real estate, for example using a buy-to-let mortgage, must pay rates defined as rates for additional properties.

This means that businesses calculate their tax based on the classic tax thresholds, adding 5% to each. In practice, when investing in a property with an example value of £400,000, the tax-free amount enjoyed by private buyers does not apply. For example, on a £400,000 purchase the higher rates give £30,000 of SDLT, compared with £10,000 at the standard rates; at lower prices the difference in proportion is even larger.

Recall the tax thresholds for investors in the form of a clear table:

Why has the government made changes to Stamp Duty Land Tax?

Raising the amount of SDLT again has been planned for a long time - it was announced as far back as 2022, when the tax was cut to improve the dynamics of the property market. The temporary thresholds were intended to support the housing market and lower the upfront costs of moving home, and were set to end on 31 March 2025. As a result, the standard nil-rate threshold and first-time buyer relief returned to the levels that applied before 23 September 2022.

Companies and investors buying additional residential property usually pay the higher rates, which on a single purchase can run into tens of thousands of pounds. It is not for us to judge the fairness and efficiency of these measures, but it is hard to deny that the legislation favours those who have not yet owned their own property.

Summary

Since 1 April 2025, many buyers pay more Stamp Duty Land Tax than under the temporary thresholds.

If you are planning to buy a house in the UK, we warmly welcome you to join us. Your first meeting with an advisor will last about 40 minutes and does not commit you to anything. We will tell you at the very beginning how much you can borrow, what credit terms you can count on and how the process of buying property in the UK works. Don’t wait, take care of your finances today!