The autumn budget saw Rachel Reeves unveiling an increase to stamp duty land tax (SDLT) that will have an impact on second home buyers and property investors. There’ll also be an end to the higher SDLT thresholds which could mean higher tax bills for “regular” buyers.
What is stamp duty?
In England and Northern Ireland, property buyers might be liable for this tax when they buy land or property. It’s levied at different rates depending on the price you pay and whether the property will serve as your main residence.
SDLT for second properties has increased by 2%
Reeves announced that SDLT on additional properties (so-called second homes) would rise by 2%, from 3% to 5% of the purchase price, in October 2024.
This increase, according to Reeves, will help more than 130,000 additional transactions for first-time buyers and second steppers over the next five years.
SDLT thresholds will fall on April 1 2025
It’s not just a rise in SDLT payments for investors and second home buyers – the thresholds at which the tax kicks in will fall on April 1 for all properties, making moving more expensive for many.
This means that if you purchase property before the 31 March deadline, the thresholds and rates of Stamp Duty will be:
If you buy property before March 31, the thresholds and rates of SDLT will be:
Up to £250,000 – 0%
£250,001 to £675,000 – 5%
£925,001 to £1.5 million – 10%
The remaining amount above £1.5 million – 12%
If you miss the March 31 deadline, however, your SDLT thresholds and rates will be:
Up to £125,000 – 0%
£125,001 – £250,000 – 2%
£250,001 to £925,000 – 5%
£925,001 to £1.5 million – 10%
The remaining amount above £1.5 million – 12%
A worked example
Let’s say you’re buying a property worth £600,000 and it will be your only home. Under the current rules, you’d be liable for Stamp Duty of £17,500. If you delayed buying until after the change comes into force on 1 April 2025, you’d pay an extra £2,500 in Stamp Duty.
If you were to buy a house worth £550,000 and you completed before March 31 2025, you’d pay £15,000. However, if you missed the deadline and completed after April 1 on the same property, you’d pay an extra £2,500 in SDLT because the portion between £125,001 and £250,000 is taxed as well.
