MILLIONS of first-time buyers face a huge financial blow as stamp duty thresholds are set to fall next month.
Stamp duty land tax (SDLT) is a lump sum payment you have to make when purchasing property over a certain threshold.
As a result, buyers will need to pay stamp duty on 93% of properties for sale in England from April 2025[/caption]
From 1 April, first-time buyers purchasing a property worth £425,000 will, for the first time since 2022, face a stamp duty charge of £6,250.
Currently, first-time buyers are exempt from paying stamp duty on properties priced up to £425,000.
If a property is more expensive, they only pay tax at 5% on the portion above £425,000 and up to £625,000.
As a result, 80% of first-time buyers are not liable for any stamp duty, while only 14% are required to pay a reduced rate, according to property site Zoopla.
The lower limit for first-time buyer stamp duty exemption was temporarily increased back in 2022 from £300,000 to £450,000.
The maximum value of a property on which first-time buyers’ relief also rose from £500,000 to £625,000.
Similarly, the threshold at which all other buyers begin to pay stamp duty was raised from £125,000 to £250,000.
These thresholds are set to revert to their previous levels next month.
It’s a huge blow for all home buyers and means they have just weeks left to get a sale across the line before the thresholds at which stamp duty becomes payable fall.
As a result, buyers will need to pay stamp duty on 93% of properties for sale in England from April 2025.
Fortunately, we’ve outlined how you can easily check the amount of stamp duty you’ll owe from April 1.
What is stamp duty?
STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.
You pay the tax when you:
- Buy a freehold property
- Buy a new or existing leasehold
- Buy a property through a shared ownership scheme
- Land is transferred to you or property in exchange for payment, for example, you take on a mortgage or buy a share in a house
The rate you pay depends on the price and type of property and certain thresholds.
If you are a first-time buyer no stamp duty is due if the property is worth £425,000 or less.
You’ll also get a discount if the purchase price is £625,000 or less and will only pay 5% SDLT on the portion from £425,001 to £625,000.
Those who aren’t first-time buyers will pay different rates depending on the value of their new home:
- If it’s up to £250,000 – no stamp duty is paid
- For the next £675,000 (the portion from £250,001 to £925,000) – stamp duty is charged at 5%
- For the next £575,000 (the portion from £925,001 to £1.5million) – stamp duty is charged at 10%
- For the remaining amount (the portion above £1.5million) – stamp duty is charged at 12%
For example, if you are buying a home worth £300,000 you would pay stamp duty at a 5% rate on the £50,000 – £2,500.
You’ll usually have to pay 5% on top of SDLT rates if buying a new residential property means you’ll own more than one.
How can I calculate how much stamp duty I’ll pay from April?
Calculating the stamp duty you’ll owe is simple, thanks to a number of free online calculators.
For example, you can use the government’s Money Helper tool to show how much you will have to pay for purchases that complete before April 1.
You can find out more by visiting moneyhelper.org.uk/en/homes/buying-a-home/stamp-duty-calculator.
Alternatively, the website stampdutycalculator.org.uk can help you determine how much stamp duty you’ll need to pay on a property transaction both now and after April 1.
Simply select whether you are a first-time buyer, moving home, or purchasing an additional property.
Next, enter the property’s purchase price, and the tool will provide two figures: the stamp duty payable up to March 31 and the stamp duty payable from April 1 onwards.
How much more in stamp duty will I pay from April?
From April 1, first-time buyers purchasing a property valued at £425,000 will be hit with a stamp duty charge of £6,250 – an increase from the current rate of £0.
Those buying a property valued at £500,000 will see their stamp duty rise to £10,000 – up from the current rate of £3,750.
Additionally, those buying a property valued at £600,000 will see their stamp duty rise to £20,000 – up from the current rate of £8,750.
From April 1, home movers purchasing a property values at £250,000 will be hit with a stamp duty charge of £2,500 – an increase from the current rate of £0.
Those buying a property valued at £500,000 will see their stamp duty rise to £10,000 – up from the current rate of £3,750.
Home movers buying a property valued at £500,000 will see their stamp duty rise to £15,000 – up from the current rate of £12,500.
Additionally, home buyers purchasing a property valued at £600,000 will see their stamp duty rise to £20,000 – up from the current rate of £17,000.
How to get the best deal on your mortgage
IF you’re looking for a traditional type of mortgage, getting the best rates depends entirely on what’s available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
