During the Autumn Budget, the Labour Government announced their plans to increase Stamp Duty Land Tax (SDLT) for those who buy a new residential property when they already own a home. Buyers will now pay five per cent SDLT on their additional purchase, an increase of two per cent.
These new rates came into effect on Thursday, 31 October. However, more SDLT changes will affect buyers from Monday, 31 March 2025.
Here’s everything you need to know about the upcoming changes and how this may affect your moving journey.
First things first, what is Stamp Duty Land Tax?
SDLT is a tax paid by home buyers in England and Northern Ireland when they purchase land or property over a certain value. The tax is calculated based on bands of the property price, with different percentages applying to each band.
When you buy a property, SDLT is calculated incrementally—different portions of the property price fall into different tax bands. For example:
- Each portion of the price is taxed at the rate for its band
- This approach means you don’t pay the higher rate on the entire property price, just on the portion that falls within a particular band
So under the current rules, a property purchased for £400,000 would have no SDLT applied to the first £250,000, and a five per cent tax on the remaining £150,000. In this scenario, you would pay £7,500 SDLT.
How much stamp duty will I pay when I move to a new property under the new rules?
Those buying a new home, which they intend to live in, will need to pay more SDLT from April 2025 than they currently do.
Under the new rates:
- Properties valued £125,001 to £250,000 will be subject to two per cent tax
- Properties valued £250,001 to £925,000 will be subject to five per cent tax
- Properties valued £925,001 to £1.5mil will be subjected to 10 per cent tax
- Properties valued over £1.5mil will be subject to 12 per cent tax
How much Stamp Duty will I pay on my first home?
From next spring, more first-time buyers will be required to pay SDLT, particularly those in London and the South West. Currently, first-time buyers pay five per cent Stamp Duty on properties worth more than £425,000, but this threshold will be reduced to £300,000 from April 2025 – this is applicable up to the property value of £500,000.
First-time buyers only pay five per cent Stamp Duty on the sum over the £300,000 threshold. For example, those purchasing their first property at a value of £400,000 will pay five per cent SDLT on the remaining £100,000 of the total property purchase.
How much Stamp Duty will I pay when buying a second home?
From 1 April 2025, SDLT rates for those buying a second property, such as a holiday home or buy-to-let property, will also rise. Under the new rules:
- Properties valued up to £125,000 will be subject to five per cent tax
- Properties valued £125,001 to £250,000 will be subject to seven per cent tax
- Properties valued £250,001 to £925,000 will be subject to 10 per cent tax
- Properties valued £925,001 to £1.5mil will be subjected to 15 per cent tax
- Properties valued over £1.5mil will be subject to 17 per cent tax
How will changing Stamp Duty rates affect West Hampstead?
According to the latest figures from Rightmove, the average property price in West Hampstead over the last year was £926,303. However, the majority of properties sold in the area over that period were apartments with an average sale price of £696,996, meaning most purchases would be subject to 5-10 per cent SDLT, depending on the buyer’s circumstances.
If you’re thinking of moving, putting your plans in motion now is key to taking advantage of the lower Stamp Duty rates. Get in touch with the Paramount team to find out more about how we can help.
