Who pays Stamp Duty Land Tax?
SDLT is a tax paid by the purchaser of a property and is based on the purchase price of the property you are buying. It is a tax paid to HMRC, usually on completion of your property purchase. Stamp Duty kicks in once property prices reach a certain value.
When do I pay stamp duty?
A rise in Stamp Duty Land tax is how the Labour Government intends to raise money for building new homes. As of 31 March 2025, the thresholds for Stamp Duty Land Tax are changing. The 0% standard rate of SDLT is going to reduce from £250,000 to £125,000. That means you are going to be paying a higher percentage on an additional £125,000 worth of your purchase price, compared to current SDLT rates. As such, if you were to purchase a property under £125,000, you would not need to pay any Stamp Duty from March 2025.
Do first time buyers receive Stamp Duty benefits?
First time buyers do receive a slight tax break when it comes to paying Stamp Duty Land Tax. Currently, first time buyers will not pay Stamp Duty on properties up to £425,000. However, the Labour Government has reduced Stamp Duty benefit for first time buyers to £300,000 from March 2025. This means that first time buyers will be paying Stamp Duty Land Tax on properties with a purchase price of over £300,000. Essentially, they are triggering Stamp Duty £125,000 earlier than they would have under previous rules.
Is the first time buyer Stamp Duty benefit available on properties of any value?
Currently, first time buyers receive Stamp Duty benefit on properties valued up to £625,000. From March 2025, the maximum property value is going to reduce to £500,000. This means that a higher rate of SDLT is payable much sooner, and on lower value properties. First time buyers purchasing a property valued over £500,000 will not be eligible for first time buyer Stamp Duty benefit from March 2025.
How will the new SDLT rates affect those purchasing a second property?
Under the current rules, those buying a second property currently pay an additional charge of 3% on all Stamp Duty land Tax thresholds. This is going to increase to 5%. As such, it is going to become much more expensive for homeowners to purchase a second property.
How are companies buying residential properties affected by Stamp Duty Land Tax?
Currently, companies purchasing residential properties on a buy to let basis pay a surplus of 3% on Stamp Duty Land Tax. That rate is going to increase to 5%. This rate is payable if you had a legitimate commercial employee living in the property, or you were renting it out commercially.
If you were to purchase the property and live in it yourself as a shareholder, there is a punitive Stamp Duty Land Tax. Currently, this is paid at a rate of 15% but it will increase to 17% on the purchase price in 2025. This tax is paid on residential properties priced over £500,000.
What taxes do property owners need to consider when disposing of a property?
If you are disposing of an investment property or second home, you need to consider Capital Gains Tax. Capital Gains Tax has increased across the board from 10% to 18%, up to a maximum of 24% depending on your marginal tax rate. For residential property, Capital Gains Tax is paid at either 18% or 24% depending on whether you are a basic rate tax payer or a higher rate tax payer.
Summary of SDLT changes
Following the 2024 budget, companies purchasing residential property (as well as individuals purchasing additional residential property) are now subject to the increase in the higher rates of Stamp Duty Land Tax from 3 to 5% above the standard residential rates of SDLT.
For more information on how the Budget has affected tax for you, contact our Personal Tax Law solicitors by email or call 03333 231580
