What’s New With Stamp Duty? – Autumn 2024
The most important take away from this blog that you need to make a note of, is how quickly you need to act if you’re looking to buy a house in the next 12 months (which is right at the bottom). If you’re not moving soon, well this is well worth knowing anyway (I promise) so read on….
The most important take away from this blog that you need to make a note of, is how quickly you need to act if you’re looking to buy a house in the next 12 months (which is right at the bottom). If you’re not moving soon, well this is well worth knowing anyway (I promise) so read on….
We have been (rightfully) bombarded with questions about stamp duty over the last two weeks, since the budget so we thought it would be nice to create a very quick blog to explain what stamp duty is (for those who don’t know) and how much you need to pay NOW (after the Autumn Budget) and how much you will have to pay after 31st March 2025.
We have also summarised at the bottom how this will likely effect the property market until April 2025.
In September 2022, it was announced by the government, that a temporary change to stamp duty, lowering the upfront costs of moving home.
The aim of this was to support the housing market, the jobs and businesses that rely on it, and those who were hoping to get on the housing ladder.
Whilst this measure was initially announced as a permanent change, at the Autumn Statement 2024, the new government announced that the increase in the residential nil-rate threshold will end on 31 March 2025.
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What is stamp duty and who needs to pay it?
Stamp Duty Land Tax (SDLT) is a tax due if if you buy a property or land over a certain price in England and Northern Ireland.
You pay the tax when you:
- Buy a freehold property
- Buy a new or existing leasehold
- Buy a property through a shared ownership scheme
- Take on a mortgage or buy a share in a house
The amount of SDLT liability depends on several factors, including (but not limited to) whether a buyer is:
- A UK resident
- Purchasing a property as an individual or company
- A first-time buyer
- Replacing a main residence
- Purchasing additional property
The amount of stamp duty you owe depends on the cost of the property, whether it will be used for residential purposes, and whether you own any other property.
It is important as a buyer, that you factor in stamp duty costs as it may be a lot higher than you think and can (in some cases) dramatically impact your budget.
When do you have to pay stamp duty?
You have 14 days to pay stamp duty from the date of completion in England and Northern Ireland – normally your conveyancer will organise this for you but you can also pay directly online, or by cheque or cash in many banks.
If it takes longer, you could face a fine, or be charged interest on the duty you owe.
How much is stamp duty at the moment? (Between 31st October 2024 and 1st April 2025)
At the moment (after 31st October 2024 but before 1st April 2025) buyers of homes worth less than £250,000 don’t pay stamp duty.
The threshold is £425,000 for those buying their first property.
These higher thresholds will end in March 2025, when they are expected to revert to previous levels (see the bit below about changes in 2025).
So, to be clear, right now, this is what you will have to pay for Stamp Duty:
As a home mover:
£0-£250,000 (£425,000 for first-time buyers) = 0%
£250,001-£925,000 = 5%
£925,001-£1.5m = 10%
£1.5m+ = 12%
As a first time buyer:
£0-£250,000 (£425,000 for first-time buyers) = 0%
£250,001-£925,000 = 5%
As a second home or investment:
If you already own a residential property worth £40,000 or more, and you buy another (or a part of one), you have to pay an additional 5% on top of the rates above (it was 3% before 31st October 2024)
The single rate of stamp duty charged when firms buy dwellings worth more than £500,000 is now 17%.
Just to be clear, this is for England and Northern Ireland only. Wales and Scotland is different.
If you already own a residential property worth £40,000 or more, and you buy another (or a part of one), you have to pay an additional 5% on top of the rates above (it was 3% before 31st October 2024).
The single rate of stamp duty charged when firms buy dwellings worth more than £500,000 will also increase from 15% to 17%.
Just to be clear, this is for England and Northern Ireland only. Wales and Scotland is different.
How will Stamp Duty change in April 2025?
From 1st April 2025, there will be several changes coming into effect:
- Everyone (except first time buyers) will pay stamp duty on properties above £125,000.
- First time buyers will pay Stamp Duty on any properties above £300,000.
- First time buyers will pay 5% from £300,001 to £500,000.
- As of 1st April 2025, there will be an extra band added into the stamp duty thresholds for additional property purchases. Reflective of the general stamp duty changes. It is currently 5% up to £250,000. This will change to 5% up to £125,000 and 7% from £125,001 to £250,000.
So, if you are a homemover, stamp duty will look like this:
- £0-£125,000 (£300,000 for first-time buyers) = 0%
- £125,001-£250,000 = 2%
- £250,001- £925,000 = 5%
- £925,000 – £1.5m = 10%
- Over £1.5m – 12%
If you are a first time buyer, it will look like this:
- £0-£300,000 for first-time buyers = 0%
- £300,001 – £500,000 = 5%
- +£500,000 = Usual stamp duty rates apply
If you are buying a second property, as a person (not a company) such as a holiday home or investment property then your stamp duty will look like this:
- £0-£125,000 (£300,000 for first-time buyers) = 5%
- £125,001-£250,000 = 7%
- £250,001- £925,000 = 10%
- £925,001 – £1.5m – 15%
- Over £1.5 million – 17%
How These Changes Impact the Market
These stamp duty changes are likely to have the most impact on first-time buyers. By reducing the nil rate threshold by £125,000 and reducing the maximum purchase price for which first-time buyers’ relief can be claimed by the same amount, it could make it even harder for some first-time buyers to get onto the property ladder.
For buyers and sellers, these changes may encourage buyers to act before the April 2025 hike, potentially boosting demand and prices in the short term. For sellers, this could mean a faster sale now, while buyers might benefit by avoiding upcoming cost increases and a quicker transaction.
It is likely that after April 2025, the higher SDLT rates may temper demand for second homes and high-value properties, helping first-time buyers (less competition) but potentially slowing the market for larger, high-value homes.
As always, we are here to help and can help guide you through the buying or selling process as these changes come into effect.
How can I beat the stamp duty changes? (The important bit)
To take advantage of the current stamp duty rates, and save yourself on average £6,250 as a first-time buyer and £2,500 as a home mover, you’ll need to have completed on your property purchase by 1st April 2025. Whilst this date might seem quite far away, the average time to complete a house purchase in the UK is between 12 and 16 weeks and can take longer in certain circumstances. This means the latest you can start the conveyancing process will be before Christmas 2024!
You can find out more on the gov.uk website: https://www.gov.uk/government/publications/stamp-duty-land-tax-increase-to-the-higher-rates-of-stamp-duty-land-tax-and-to-the-single-rate-payable-by-non-natural-persons/380cf2b3-cc05-4457-9624-224485c29fb5