There are some major changes happening to Stamp Duty in 2025, which will mean steeper costs for anyone buying a property from next April.
Stamp Duty thresholds were last amended by the previous government in Liz Truss’s disastrous 2022 mini Budget. The changes unveiled then mean there is currently no Stamp Duty to pay on the first £250,000 of any property purchase. For first-time buyers, the Stamp Duty threshold was raised from £300,000 to £425,000, and the value of the property on which first-time buyers can claim relief also rose from £500,000 to £625,000. These changes were among very few measures which were left unaltered by Jeremy Hunt when he succeeded Kwasi Kwarteng as Chancellor.
However, the increase in Stamp Duty thresholds was only ever intended to be temporary, and will finish at the end of March 2025, at which point they will revert to the previous thresholds.
Here, we explain what the changes could mean for you, and how second homebuyers are already facing higher Stamp Duty bills.
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How much will Stamp Duty be in 2025?
Different Stamp Duty thresholds and rates apply depending on whether you are a first-time buyer or a home-mover, or if you’re already a homeowner and are buying an additional property.
Stamp Duty thresholds for home-movers
Under current rules, home-movers don’t pay any Stamp Duty on the first £250,000 of a property purchase. After that, Stamp Duty is payable at a rate of 5% on any amount up to £925,000. So, for example, someone moving to a property costing £700,000 would face a Stamp Duty bill of £22,500. No stamp duty is payable on the first £250,000 of the property price and then 5% Stamp Duty is charged on the portion between £250,001 and £700,000, resulting in the £22,500 bill.
However, from April only the first £125,000 of a property purchase will be free from Stamp Duty, with a 2% rate charged from £125,000 to £250,000. The re-introduction of the 2% band for stamp duty means that home movers will pay up to £2,500 more on their tax bill. Based on the above example, someone buying a property for £700,000 from April 2025 will face a Stamp Duty bill for £25,000, £2,500 more than they would have paid if they’ve bought before April.
If you need help working out how much Stamp Duty you’ll need to pay, the Government’s Moneyhelper service has a useful Stamp Duty calculator which can crunch the numbers on your behalf.
Stamp Duty thresholds for first-time buyers
There are special Stamp Duty rules for first-time buyers which are also changing in April 2025, and could mean more people will need to turn to the Bank of Mum and Dad to help them get onto the property ladder
As mentioned, at the moment first-time buyers benefit from reduced Stamp Duty rates when buying a property costing £625,000 or less. No stamp duty at all is payable on the first £425,000 of the value of the property and after that buyers must pay 5% stamp duty on any remaining amount up to £625,000.
However, from April 2025 only the first £300,000 of the property value will be Stamp Duty-free for first-time buyers, with 5% paid on any remainder up to £500,000.
Laura Suter, director of personal finance at AJ Bell, said: “It means a first-time buyer purchasing a property at the current limit of £625,000 will face a £11,250 hike to their stamp duty bill from April, as they would no longer be eligible for the first-time buyer tax break.
“Those moving on to their next home will also pay thousands more, but will face a less severe hike. We’ll inevitably see a flurry of people looking to lock in their home purchase before the deadline next March – with estate agents and solicitors braced for some long days ahead of the finish line.”
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,250 reviews.
Impact on the Bank of Mum and Dad
Many first-time buyers may miss the deadline, and consequently might need to turn to parents or grandparents to help them cover higher Stamp Duty bills.
Ben Waugh, Managing Director of more2life, said: “From April 2025, when the current stamp duty exemptions for first-time buyers expire, those looking to get onto the housing ladder may have no choice but to rely on family for financial support. Currently, around 1 in 10 families, when releasing equity from their home, do so to gift money to family, a figure we expect to grow as a result of the Budget changes.”
You can find out more in our article Can I take money out of my property to give to my children? Bear in mind that if you are considering equity release as a way to help family onto the property ladder, it definitely won’t be right for everyone, as it can affect any means-tested benefits you receive and will also reduce the value of any inheritance you’d planned to leave, so it’s essential to seek professional financial advice first.
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,250 reviews.
Second home buyers already paying more
If you buy an additional property in England or Northern Ireland, which is worth £40,000 or more, you’ll now be charged 5% extra on top of the normal Stamp Duty rates, up from 3% before the October 2024 Budget. These changes came into effect on October 31, 2024, so will affect anyone purchasing a second property now.
This means the total Stamp Duty charges for those purchasing second homes are tiered as follows (old rates are shown in the second column).
Property value of additional property | Stamp duty old rate | Stamp duty new rate |
Up to £250,000 | 3% | 5% |
The portion from £250,001 to £925,000 | 8% | 10% |
The portion from £925,001 to £1.5 million | 13% | 15% |
The portion above £1.5 million | 15% | 17% |
The additional tax is not payable if your second home is a caravan, mobile home or houseboat.
Bear in mind that you will also need to pay the additional charge if you buy your new home before you’ve sold the previous one because, for a short time at least, you’ll own two homes. You may be able to claim the additional tax back via your self-assessment tax return.
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,250 reviews.
Remember other home-buying and selling costs
Stamp Duty isn’t the only cost you’ll face when buying a property. You’ll also need to factor in conveyancing costs, legal fees, and any survey you plan to have.
You can find out more about all these costs in our guide How much does it cost to move house?
If you’re thinking of putting your property up for sale in the New Year, you can see which agents will do the best job of selling your home, based on past performance, using the GetAgent.co.uk website.
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