What are the changes to Stamp Duty Land Tax from April 2025?

There are important Stamp Duty Land Tax (SDLT) changes taking effect on and from 1 April 2025 that will affect buyers and, indirectly, sellers of residential property. In this article, our tax consultant solicitor Michael Fluss outlines the key updates to be aware of.

1. Other than where first-time buyer’s relief is available, an additional £2.5k SDLT will become chargeable on any residential property acquired for £250k or more. This is because the SDLT nil rate band threshold will then fall back from £250k to £125k (as was the case before 23 September 2022) and SDLT will (as before that date) be chargeable at 2% (or where the higher rate on additional dwellings and/or non-UK resident surcharge applies, an additional 2%) on the difference.
2. Reductions in the scope of first-time buyer’s relief will result in up to £6.25k additional SDLT becoming chargeable where the relief is claimed in relation to any residential property purchased for more than £300k. This is because, reverting to the pre-23 September 2022 position:

• first time buyer’s relief will only be available where the purchase price of the property does not exceed £500k (down from the current cap of £625k); and
• the current £425k nil rate band first-time buyer’s relief threshold will fall back to £300k (with the difference being chargeable to SDLT at 5%).

3. In addition, from 1 April 2025, additional SDLT of up to £11.25k will become payable where first-time buyer’s relief can no longer be claimed but could previously (because the purchase price exceeds £500k but not £625k). This is due to the withdrawal of the relief in those circumstances combined with the reduction in the SDLT nil rate banding, as described.
4. Importantly, given the stated temporary duration of these SDLT breaks (provided for by the Stamp Duty Land Tax (Temporary Relief) Act 2023), any acquisition of residential property under a contract entered into before 1 April 2025 but only completed on or after 1 April 2025 will not benefit from these breaks unless the contract is substantially performed (whether by means of the taking of possession of the property or the payment of 90%+ of the purchase price) before that date. Where the contract is substantially performed before completion, the date of substantial performance (rather than completion) will be the “effective date” of the acquisition for SDLT purposes and the SDLT computation will (as a general rule) be determined by reference to the SDLT legislation applying at that date, rather than completion.

If you are buying or selling residential property, it may be helpful to seek completion before 1 April 2025. If that is not possible, you may wish to consider whether (as appropriate) the contract can be substantially performed before that date.

These changes will impact purchasers and sellers of residential property, and both should be planning accordingly.

If you have questions about the changes to SDLT, please contact Michael Fluss.