As of 2025, the Labour government has announced significant changes to Stamp Duty Land Tax, commonly referred to as Stamp Duty, which will take effect on April 1st of this year.
These adjustments are poised to significantly affect both first-time buyers and existing homeowners as thresholds fall to a new low. The previous adjustments made in September 2022, which temporarily increased the Stamp Duty threshold, have now ended.
First-time buyers are predicted to be the most affected by the changes. As leading conveyancing and residential solicitors at Brown Turner Ross, we understand the significance of the general public being aware of these changes.
Buying a property in 2025 and interested in learning more about SDLT rates? Read our full guide to 2025 stamp duty changes and rates below.
What is Stamp Duty?
Stamp Duty is a tax paid by the buyer of a residential property in the UK when the purchase price exceeds a certain amount. Previously, the threshold to pay Stamp Duty was £250,000, but from the 1st April 2025, it will change to £125,000.
If you are looking to purchase a property in the near or distant future, it is essential that you understand the tax that you may owe.
Stamp Duty Rates in 2025
With the overhaul of the current threshold, changes to Stamp Duty rates have occurred that you need to know about.
Below, we will detail the past Stamp Duty rates compared to the newer rates.
Current Stamp Duty Rates in The UK up to 31st March 2025
Standard Rates for Residential Properties:
- Up to £250,000: 0%
- £250,001 to £925,000: 5%
- 925,001 to £1.5 million: 10%
- Anything above £1.5 million: 12%
First-Time Buyer Relief
- No SDLT on properties up to £425,000
- 5% on the portion between £425,001 and £625,000
- No relief available for properties over £625,000
Changes Effective from April 1, 2025:
Standard Rates for Residential Properties:
- Up to £125,000: 0%
- £125,001 to £250,000: 2%
- £250,001 to £925,000: 5%
- £925,001 to £1.5 million: 10%
- Above £1.5 million: 12%
First-Time Buyer Relief:
- No SDLT on properties up to £300,000
- 5% on the portion between £300,001 and £500,000
- No relief available for properties over £500,000
As you can see by comparing the rates, there have been significant changes, which could greatly impact buyers looking to get on the property ladder.
What is the Three-Year Rule For Stamp Duty?
Luckily, some aspects of Stamp Duty, such as the Three-Year Rule, remain the same. This rule outlines that buyers may be eligible to claim a refund if they sell their previous primary residence within three years of purchasing a new one.
When you buy a home before selling your old one, you are required to pay an additional 5% surcharge on top of your standard rates of stamp duty. This means that homeowners looking to purchase a second home still have the comfort of knowing that they can receive a percentage refund.
Using this information and the change in rates implemented in 2025, you can calculate the Stamp Duty Tax that you are expected to pay in 2025 if you decide to purchase a home.
Stamp Duty Reliefs and Exemptions
If you are looking to purchase a property and are worried that you may not be able to afford it due to the 2025 changes, do not despair. There are still reliefs and exemptions in place that can help the tax have less impact.
First-Time Buyer Relief
We have already discussed how first-time buyer relief, with a higher threshold of £425,000, can reduce Stamp Duty costs. First-time buyers can claim relief if they intend to occupy the property as their main residence and the purchase price does not exceed the threshold.
Reduced rates may also be offered for properties up to £625,000 in value.
Shared Ownership Exemptions
If you’re buying a home through a shared ownership scheme, exemptions and reliefs may apply. Instead of paying full Stamp Duty Tax on the full value of the property, you can choose to only pay tax on the share that you’re purchasing.
If your share of the property is valued below £150,000, you will not need to pay anything at all, but if you later increase your shares, you may be required to pay additional tax. If you later buy someone out of the house, you will be fully eligible.
Government Incentives
Various government schemes, such as the Right to Buy scheme, may help you qualify for an exemption or a reduced rate.
Properties purchased by charities or for charitable purposes are also exempt, including those acquired by social landlords and certain public entities.
Buy-to-Let and Second Home Stamp Duties
As previously mentioned, if someone chooses to purchase a property while still in ownership of an existing property, they may be subject to a 5% surcharge on top of their tax. This is believed to be in place to stop landlords from over-purchasing properties to put to let.
If you are a landlord looking to purchase a property to rent it out, you’ll be required to pay an additional 5% charge on top of your existing Stamp Duty charges.
This occurs because buying buy-to-let properties comes with higher risks, so this additional tax provides further lender protection.
How to Calculate Your Stamp Duty
When purchasing a property, you will likely have to pay both Stamp Duty and solicitors fees. The costs can add up, and if you do not have an accountant, which we would recommend during this stage, you may need to work out the incurred costs yourself.
You can find online calculators for Stamp Duty and solicitors’ fees, but if you know the relevant rates and which ones pertain to your situation, you can easily calculate them yourself.
If you still do not understand the calculation, don’t be afraid to ask for the assistance of any conveyancing and residential solicitor you are working with, as they can help.
Ways to Reduce Your Stamp Duty Liability
We all want to cut costs, so you may be glad to hear that there are ways that you can reduce your Stamp Duty liability and pay less on your property. Some of these ways include;
Buying Below The Threshold
The best way to avoid paying Stamp Duty is to secure a property that falls under the current threshold. This may be more difficult for people who are looking to extend their property portfolio or purchase a second property, but it may be more feasible for new buyers, depending on the area where they reside.
Transferring Property
If you are no longer the property owner due to residential conveyancing, such as from a divorce, you will not need to pay Stamp Duty Land Tax. The same applies when a property is transferred through inheritance, as properties will not be subject to Stamp Duty Land Tax but may be subject to inheritance tax instead.
Using a Company Structure
It is no secret that securing a property through a limited company can offer tax advantages. However, If you were to move an existing, personally owned property into a company, this would be treated as a sale at market value, and so you would still be required to pay Stamp Duty with a 5% surcharge for limited companies.
If you need further information on how a company structure may impact the Stamp Duty payable, we suggest you discuss it further with our property litigation experts.
Potential Future Tax Planning Considerations
Stamp Duty is generally an unavoidable cost, but with some forward-thinking strategies, you may be able to lower future Stamp Duty costs. The following methods may help you avoid the Stamp Duty Tax rates implemented in 2025.
Buying Shares in a Company That Owns a Property
To avoid paying a lot in Stamp Duty, consider buying shares in a business that owns property. While this doesn’t eliminate all costs, share purchases incur Stamp Duty at just 0.5%, significantly lower than the usual rates.
Holding Property in a Family Investment Company
Given recent developments, it seems likely that additional adjustments to Stamp Duty regulations and thresholds may occur. To shield future generations from increased taxes, managing property through a Family Investment Company (FIC) can be an excellent option.
By maintaining ownership of a property in this manner, you can transfer it without incurring Stamp Duty whenever ownership changes. Not only is this beneficial for overcoming Stamp Duty Tax, but it can provide better planning for inheritance tax.
Timing Your Purchase Around Stamp Duty Changes
As seen through reductions in 2022, the government can sometimes offer reductions or Stamp Duty breaks to help buyers save money. It is essential to learn the pattern of these reductions and look out for environmental signs of change, such as political reforms.
You can time your property purchase around Stamp Duty changes by staying vigilant.
How Stamp Duty Impacts the Property Market
Recent changes to Stamp Duty Land Tax are set to have a huge impact on the property market. These changes may discourage purchases and property sales, leaving buyers and sellers in an unfortunate position.
The new changes may prove to be particularly difficult for first-time buyers, especially if the property prices are high in the area where they wish to reside. These changes also mean that housing stock may be reduced as people become less inclined to sell their properties or upgrade due to the impending costs.
Since these changes will take effect in April 2025, understanding their actual impact on the housing market can be challenging, but it will become more apparent as time passes.
Understand Where You Stand With Brown Turner Ross
No matter the outcome and the longevity of the new Stamp Duty Tax changes, it is important to stay informed.
If you are looking to purchase a property or you would like further advice, we would recommend that you seek legal advice from one of our expert property solicitors here at Brown Turner Ross.
Developing a deeper understanding of the projected changes to Stamp Duty may give you an upper hand in the property market, so contact Brown Turner Ross for expert guidance today.