Stamp Duty Land Tax (SDLT) is a tax you pay when buying property or land in England and Northern Ireland. In 2025, notable changes to SDLT will come into effect, which could impact how much buyers will need to set aside when purchasing a property.

Whether you are a first-time buyer, moving up the property ladder, or investing in additional properties, understanding these upcoming adjustments is important for making informed decisions. In this post, we will outline the Stamp Duty Land Tax changes and what they could mean for you.

The SDLT rules before April 2025

SDLT is applied based on the purchase price of a property and follows a tiered system. This means that different portions of the property price are taxed at different rates. Residential properties valued below a certain threshold have historically been tax-free, while properties exceeding this amount are subject to progressively higher rates.

Under the current stamp duty rates, buyers purchasing residential properties worth up to £250,000 do not need to pay stamp duty, as this portion is taxed at 0%. However, for properties valued above this threshold, buyers face a tiered tax rate structure. Specifically, any amount between £250,001 and £925,000 is taxed at 5%, while the portion from £925,001 to £1.5 million is subject to a 10% rate. For property values exceeding £1.5 million, the tax rate rises to 12%. This incremental structure means that higher portions of the property value incur higher tax rates, influencing the overall cost of purchasing a home and impacting how much a buyer needs to budget.

For first-time buyers, there has been the benefit of First-Time Buyers’ Relief, which has aimed to make buying a home more manageable. Specifically, this relief allows first-time buyers to be exempt from paying SDLT on the first £425,000 of properties valued up to £625,000. This has been particularly helpful in easing the financial burden for those stepping onto the property ladder for the first time.

If you are purchasing an additional property, such as a second home or a buy-to-let investment, the SDLT system includes higher rates, now structured to reflect significant surcharges. From the outset, buyers of additional properties face a 5% stamp duty rate on the portion of the property value up to £250,000. For the portion between £250,001 and £925,000, the rate increases to 10%, while amounts from £925,001 to £1.5 million are taxed at 15%. For properties valued over £1.5 million, buyers will encounter a 17% rate. This surcharge, applied to each portion of the property price, means that buyers of second properties pay SDLT at higher rates than those purchasing their main home. These elevated rates have long been a key consideration for property investors and landlords, shaping how they approach new acquisitions and influencing their overall investment strategies.

Details of the 2025 SDLT changes

From April 2025, changes to Stamp Duty Land Tax (SDLT) will come into effect, impacting different categories of homebuyers. These adjustments reflect economic shifts and align with current market needs. The government announced these updates to modernise SDLT and support broader housing policy objectives.

Here is an overview of what to expect and how these changes could affect you:

• New SDLT thresholds: one of the notable changes to Stamp Duty Land Tax (SDLT) in 2025 is the adjustment of the tax-free threshold, which refers to the minimum property price at which SDLT begins to apply. Under the new structure, the threshold will revert to £125,000, where properties valued up to this amount will remain exempt from SDLT, taxed at 0%. However, any portion between £125,001 and £250,000 will be taxed at 2%, while amounts between £250,001 and £925,000 will incur a 5% rate. For property values from £925,001 to £1.5 million, the rate increases to 10%, and any amount over £1.5 million is taxed at 12%. This alteration could affect the affordability of lower-priced homes, potentially making it more challenging for buyers near the new threshold, as they may now be subject to SDLT where previously they were not.
• Revised rates for higher-value properties: for those buying higher-value homes, the SDLT rates will be restructured. The changes could mean that buyers purchasing properties at a maximum purchase price above certain bands might face higher SDLT bills. This could prompt those looking to buy luxury homes or properties in competitive areas to rethink their budgets to cover the increased SDLT. Buyers in these price brackets may need to assess the financial impact of the new rates when considering their overall expenditure.
• First-time buyers: first-time buyers have historically benefited from SDLT reliefs, allowing them to be exempt from paying SDLT up to a certain portion of their property's value. In 2025, this relief will be adjusted, with the government announcing that the tax-free portion for first-time buyers will be capped at £300,000, where the rate remains at 0%. However, for properties valued between £300,001 and £500,000, first-time buyers will face a 5% tax rate. This change may impact how competitive first-time buyers feel when entering the housing market. For example, a first-time buyer moving from rented accommodation to a new home may now need to plan for an SDLT charge where they previously might not have expected one, affecting their overall budget considerations.
• Second properties and additional homes: the surcharge applied to second properties and additional homes is also set for review, with changes taking effect from 1st April 2025. This surcharge has long been an important consideration for property investors and those looking to expand their portfolios through buy-to-let properties or holiday homes. Under the revised rates, buyers of additional properties will face a 5% stamp duty rate for the portion of the property value up to £125,000. The rate increases to 7% for the £125,001 to £250,000 range, and jumps to 10% for the portion between £250,001 and £925,000. Higher property values will be taxed at 15% for amounts from £925,001 to £1.5 million, and a steep 17% for any amount over £1.5 million. These changes could significantly impact property investors' plans, prompting them to reassess their investment strategies and adjust their budgets to account for the increased cost of SDLT when purchasing additional properties.

Practical tips for prospective buyers in 2025

If you are planning to buy a home in 2025, understanding the updated Stamp Duty Land Tax (SDLT) structure can be an important part of your preparation. Here are some pointers to consider that may help make your buying process smoother:

• Budget wisely: Incorporate the updated SDLT costs into your financial planning. Take the time to review the new SDLT rates and thresholds as they relate to your property price range. Being aware of how much SDLT you may need to pay helps you set a realistic budget that includes this expense, allowing you to allocate funds appropriately for both the purchase price and any additional costs.
• Plan ahead: Begin planning your property purchase with a clear understanding of how SDLT could affect your total expenditure. This early preparation can help you feel more confident and reduce the likelihood of unexpected costs when the time comes to complete your transaction. Factor SDLT into your overall budget calculations to prevent any last-minute surprises that could disrupt your plans.
• Seek professional advice: Speaking with a solicitor such as Walker Foster can offer clarity on how the SDLT changes apply to your specific situation. We can provide tailored guidance that takes into account the details of your property purchase, helping to explain any complexities. Our extensive expertise can be particularly helpful if you are deciding between buying now or waiting until after the changes take effect. By discussing your plans with one of our solicitors, you can make a more informed decision that reflects both current and future SDLT obligations.
• Stay updated: SDLT changes can impact your property purchase in different ways, so keeping informed about any further announcements or updates can be worthwhile. This helps you stay prepared and make adjustments as needed to your buying strategy.
• Evaluate your options: If you are considering a property at the higher end of the price spectrum or planning to buy a second home, take time to weigh up how the SDLT changes might influence your choice. Revisiting your property preferences and financial position can be beneficial in deciding how best to approach your purchase.

At Walker Foster, we are here to provide support and clear advice on how SDLT and other property-related considerations might affect you.

At Walker Foster, we are dedicated to providing support and advice tailored to your individual property needs. We know that each purchase brings its own set of challenges, whether you’re a first-time buyer, an investor, or a homeowner planning your next move. Our team takes the time to understand your specific situation and aims to make every step of your property journey clear and manageable.

Here’s how we can help you throughout your property transaction:

• Personalised support: we believe in a bespoke approach that recognises the unique aspects of your property purchase. Our advice is tailored to your particular needs, from the initial stages of understanding your SDLT obligations to planning your overall budget. Whether your focus is on making the most of SDLT reliefs, budgeting for additional property surcharges, or understanding the changes ahead, we align our guidance with your objectives.
• Detailed guidance: at Walker Foster, we go beyond basic SDLT calculations to offer comprehensive advice on how SDLT rules, including upcoming changes, may impact your property purchase. Our solicitors explain these details in clear terms, so you can feel informed and confident about how SDLT fits into your financial plans.
• Continuous support: we’re here to assist you from start to finish, ensuring each part of the process is as straightforward as possible. Our team is on hand to answer questions, provide updates, and offer practical advice, helping you feel reassured throughout your property transaction.
• Complete oversight: from understanding the current SDLT structure to planning for 2025 changes and beyond, we remain by your side. Our role is to make sure your purchase is well-managed and transparent, giving you peace of mind and confidence in your property decisions. Reach out to Walker Foster for friendly, professional assistance that makes your property journey smoother and more straightforward.