Instruct Now & Avoid Higher Stamp Duty Bill from 1st April

If you tuned into the Autumn Budget in early November, you may have heard the Chancellor make an announcement about stamp duty. It wasn’t a change that was expected either.

While many buyers of primary residences – that’s purchases designed to live in permanently and not rent out – were hoping for a change to stamp duty thresholds that would reduce their tax bill, it was additional property purchasers that took the hit.

Second home buyers & landlords affected overnight

Additional property purchases is the catch-all term for any home that isn’t a primary residence. That could be a buy-to-let, student accommodation, a house in multiple occupation (HMO), a holiday home, a city pad or an Airbnb.

In order to fill a reputed £40 billion financial black hole, the Chancellor is collecting extra money from additional property purchases by raising the surcharge from 3% to 5%. The change took effect almost instantly, with the new threshold in force from 31^st October 2024.

More expensive stamp duty for all coming soon

While the Autumn Budget only publicly addressed stamp duty for those buying additional properties, a change is afoot for all buyers as Labour had previously - and quite surreptitiously - announced it was tinkering with thresholds. The change, which takes effect on 1^st April 2025, has created a pressing deadline for anyone who wants to benefit from a lower stamp duty bill.

New stamp duty thresholds from 1st April 2025

First-time buyer? Purchase later, pay more

First-timer buyers are set to lose a temporary stamp duty discount that was introduced by the last Government. At present, stamp duty is only applied to the portion of a first-time buyer’s property purchase that’s in excess of £425,000. On 1^st April 2025, however, this threshold will drop to £300,000, meaning there’s more of a home’s value to pay tax on.

For example, a first-timer purchasing a home worth £309,572 will have a new £478 stamp duty bill from 1^st April. Purchase a first home for £344,190 and that bill jumps to £2,209.

Current homeowners also set for higher stamp duty

Existing homebuyers will also notice an increase in stamp duty rates come 1^st April 2025. Currently, there is zero stamp duty to pay on the portion of a purchase below £250,000, with 5% applied to the portion from £250,001 to £925,000.

As of 1^st April 2025, only the first £125,000 of a home’s value will be tax free. After that, 2% will be applied to the portion between £125,001 to £250,000, and 5% applied to the portion between £250,001 to £925,000

Based on analytics by Propertymark, homeowners purchasing a property worth £293,000 - the average UK house price - will find their stamp duty bill doubles from £2,150 to £4,650. Those buying a home for £384,804 will pay £2,500 more from 1^st April next year, while a £531,212 purchase will also see the buyer paying £2,500 extra.

Instruct now to complete before the tax hike

As we saw with the Budget announcement concerning additional property stamp duty, the change has no regard for where purchases are in their transaction journeys. Landlords who hadn’t completed a buy-to-let purchase found their stamp duty bill shot up overnight – even those that had exchanged contracts.

It’s a warning shot to buyers and sellers who want to make the most of the more favourable stamp duty thresholds before they change next year. Buyers will need to avoid being in the conveyancing process on 31^st March or they will be hit with a higher tax bill – and may possibly experience their chain collapse if others can’t afford the hike.

How to reduce the risk of a higher stamp duty bill

Instructing White & Brooks to sell your home now and find you an onward purchase will give us enough time to achieve completion before 1^st April 2025. With the ability to save thousands of pounds by moving now, it really is a no brainer for first-time buyers and movers.

Get the ball rolling by booking a free, no-obligation valuation today. Our teams in Gosport, Chichester and Bognor Regis have day time, evening and weekend availability, so don’t delay – get in touch.