Stamp Duty Land Tax (SDLT): Where are we now?
The higher rates of SDLT relating to the purchase of second homes and rental properties were increased from 3% to 5% from 31st October 2024.
Normal mainstream SDLT rates re purchasing residential property from 31st October 2024
| Property Cost | SDLT Rate |
| Up to £250,000 | Zero |
| £250,001 to £925,000 | 5% |
| £925,001 to £1.5million | 10% |
| Over £1.5million | 12% |
Purchasing a second home (or rental domestic property) Rates (5% surcharge), from 31st October 2024
| Property Cost | SDLT Rate |
| Up to £250,000 | 5% |
| £250,001 to £925,000 | 10% |
| £925,001 to £1.5million | 15% |
| Over £1.5million | 17% |
These increased rates of SDLT, particularly for landlords, are now very expensive! The increased SDLT surcharge will act as a further deterrent for landlords who are considering acquiring further ‘buy to let’ properties.
Non-UK residents
Non-UK residents that purchase a residential property in England and Northern Ireland are liable to a 2% SDLT surcharge (the NR surcharge).
The NR surcharge will apply to the entire purchase price. It adds an additional 2% to each of the existing SDLT residential rates.
Purchases by non-resident individuals
An individual will be non-UK resident for the purposes of SDLT if they spend fewer than 183 days in the UK in any continuous period of 365 days, beginning 364 days before and ending 365 days after the transaction occurs.
Limited Companies
Limited companies will always pay a 5% surcharge, on top of the standard SDLT rate when they purchase residential property in England and Northern Ireland.
First-time buyers
The threshold for first-time buyers was temporarily increased in September 2022 to £425,000 and the maximum value of a property on which first-time buyers’ SDLT relief can be claimed was also increased to £625,000.
The SDLT position for first time buyers is currently as follows:
| Property Cost | SDLT Rate |
| Up to £425,000 | Nil |
| £425,001 to £625,000 | 5% |
These SDLT reductions will remain in place until 31 March 2025. Accordingly, they are temporary.
Certain first time buyers will have to act very promptly in order to complete their purchases before 31st March 2025. If they fail to do so, in some cases huge extra SDLT will be payable!
The end of the Stamp Duty holiday
From 1st April 2025, the nil rate SDLT threshold will be reduced from £250,000 to £125,000, marking the end of the SDLT holiday, which was introduced in the September 2022 mini Budget.
The first time buyer threshold will also be reduced from £425,000 to £300,000.
From 1 April 2025, the property limit for the SDLT reduction for first-time buyers will resort to £500,000 and only the first £300,000 of the value of the property will be exempt from SDLT, with 5% payable on any remainder up to the reduced £500,000 figure.
For other buyers, i.e those property owners moving to a new home, from April 2025 the £250,000 exemption will be scrapped and only the first £125,000 of a property purchase will be stamp duty free, with a 2% rate charged from £125,000 to £250,000.
Stamp Duty Land Tax — residential property from 1 April 2025
| Property value | Rate (on portion of value above threshold) | Rate (on portion of value above threshold) if purchase is of an additional residential property |
| £0 to £125,000 | 0% | 5% |
| £125,001 to £250,000 | 2% | 7% |
| £250,001 to £925,000 | 5% | 10% |
| £925,001 to £1.5 million | 10% | 15% |
| Over £1.5 million | 12% | 17% |
Example of SDLT on a residential property transaction
In January 2025, Tom and Lynne (both first time buyers) are considering buying a flat for £600,000.
The SDLT that they will pay relating to the purchase will be:
| £ | £ |
| 425,000 at 0% | Nil |
| 175,000 at 5% | 8,750 |
| 8,750 |
They need to move sharply and complete by 31st March 2025.
If they fail to do so and purchase the property in April 2025, the SDLT payable will be at the normal SDLT rates, because they have bought a property for more than £500,000.
SDLT payable:
| £ | £ |
| 125,000 @ 0% | Nil |
| 125,000 at 2% | 2,500 |
| 350,000 at 5% | 17,500 |
| 600,000 | 20,000 |
They will have an extra £11,250 SDLT to pay.
Conclusion
First time buyers in a similar position to Tom and Lynne above, will have to move very quickly and complete by 31st March 2025. If they fail to do so, the additional SDLT payable could be considerable.
Landlords purchasing domestic rental properties are now also badly hit by the increased SDLT rates.
The impact of SDLT should never be overlooked when considering the purchase of a residential property.
Contact Thomas Adcock, Tax Partner, for more information on SDLT.
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