Stamp Duty Changes Made Simple 

Stamp Duty Changes Made Simple | 4-Minute Read

Let’s talk about the new stamp duty changes but allow us to make it simple

The UK Government has now implemented changes to Stamp Duty Land Tax (SDLT), affecting how much tax homebuyers will pay when purchasing property in England and Northern Ireland. Here’s a breakdown: 

For Home Movers (homeowners who are selling and buying): 

Before March 31st, 2025, home movers didn't pay any stamp duty on the first £250,000 of the property's price. 

Now the tax-free threshold has decreased to £125,000, therefore this means you'll now pay: 

Example:  

If you buy a house for £295,000, your stamp duty would be calculated as: 

• 0% on the first £125,000 = £0
• 2% on the next £125,000 = £2,500
• 5% on the remaining £45,000 = £2,250
• Total Stamp Duty: £4,750 

For First-Time Buyers: 

Before March 31st, 2025, there was no stamp duty on properties up to £425,000. For properties priced between £425,001 and £625,000, a 5% rate applied to the portion above £425,000. 

Now the tax-free threshold for first-time buyers has decreased to £300,000, therefore this means you’ll now pay: 

If the property costs more than £500,000, standard rates apply without any first-time buyer relief. 

Example:  

As a first-time buyer purchasing a property for £500,000: 

• 0% on the first £300,000 = £0
• 5% on the remaining £200,000 = £10,000
• Total Stamp Duty: £10,000 

For Additional Property Purchases (e.g. second homes or buy-to-let properties): 

Before March 31st, 2025, an extra 3% was added to each stamp duty band. Now, the additional rate increases, means you'll now pay: 

These changes mean that many homebuyers will face higher stamp duty costs, particularly those purchasing higher-priced properties or additional homes. It's essential to factor in these increased costs when planning your property purchase. 

But don’t panic! Many homebuyers consider adding this tax to their mortgage to spread the expense over time.  

Here's what you need to know about adding stamp duty to your mortgage: 

• Instead of paying SDLT up front, you can borrow additional funds from your lender to cover the tax. This means your mortgage amount increases by the SDLT owed.
• This method reduces the need for substantial upfront cash, making the purchase more manageable. Allowing you to retain savings for other expenses, such as moving costs or renovations.
• Adding SDLT to your mortgage can ease immediate financial pressure but leads to higher overall costs due to interest. It's crucial to assess your financial situation, consult with mortgage advisors and consider long-term implications before deciding. 

Speak with one of our 5-star mortgage advisors for more guidance, we understand that changes to Stamp Duty may feel overwhelming, but at Wards, we can help you every step of the way. Our team provides expert advice that’s tailored to your situation, we will help you explore financing options and even connect you with trusted mortgage advisors to ensure you make the best decision for your future.