What is stamp duty and how will the rates be changing this year? We find out how much more buyers will be paying following the deadline on 31 March and how to speed up the process to beat the hikes
One of the biggest additional costs to consider when purchasing a home is stamp duty.
At the moment, many first-time buyers are exempt from the tax. But from 1 April this year, the nil rate threshold is increasing meaning more first-time buyers will face a bill.
For other buyers – those already on the ladder who are moving to their next property – the cost will be higher.
We take a look at what stamp duty is, by how much it’s increasing and what you can do to speed things up if you are hoping to move before the hikes kick in.
What is stamp duty?
Stamp duty land tax (SDLT), to give it the full title, is a tax which is paid when you buy a property in England or Northern Ireland.
As it stands, buyers pay no tax on up to £250,000 of their property’s value. So, if you are buying a home at below this price, you will be exempt from stamp duty.
After this, buyers pay 5% tax on the next £250,000 to £925,000. Above this amount it is increases to 10% and then 12% for those buying homes for £1.5million or more.
First-time buyers, meanwhile, benefit from additional relief. They are not charged stamp duty on up to £425,000. They will be charged 5% above this up to £625,000.
Buyers in Scotland pay Land and Buildings Transaction Tax (LBTT) and in Wales it’s Land Transaction Tax (LTT).
What changes are taking place to stamp duty in 2025?
The rates described above will continue until 31 March 2025, but from 1 April things will change and the average tax bill will jump by £2,500, according to Coventry Building Society.
The nil rate for movers will fall from £250,000 to £125,000. Meanwhile, for first-time buyers it will drop from £425,000 to £300,000.
With the average first-time buyer home in London being £455,923, Coventry has calculated Stamp Duty on an average-priced first-time buyer home in the capital will soar from £1,546 to £7,796.
How will these changes impact home buyers?
Buying a home, as you can see, will become more expensive from 1 April onwards. But with the 31 March deadline looming ever closer, the market is bracing itself for a flurry of activity as buyers rush to complete.
Jonathan Stinton, head of mortgage relations at Coventry Building Society, said: “It’s going to be a busy few months for buyers, sellers, and everyone connected to the process as people race against time to save themselves thousands of pounds in tax.
“Not every part of the process is going to be in your hands, but staying organised, seeking expert help, and acting quickly will hopefully reduce some of the stress and help people get their keys ahead of the deadline.”
How can buyers speed up their purchase to beat the deadline?
Buyers who have not yet found a property and have yet to put in an offer, will need to act fast. Analysis by mortgage broker Mojo Mortgages showed 16 January was the ‘last realistic date’ to start the homebuying process if you want to stand a chance of making the deadline.
Here a few things to do if you are racing against the clock and want to ensure a speedy process.
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Get your paperwork in order
Make sure your mortgage application is smooth by preparing all your documents in advance.
Stinton explained lenders will want to see proof of your income and identification before they offer you a mortgage.
“It varies from lender to lender, but you may be asked for latest payslips and P60, or latest accounts or tax returns if you’re self-employed,” he said
“Bank statements aren’t always requested, but if they are it’s likely the lender will ask for original copies rather than ones printed at home. Ask your bank for these a few weeks in advance to make sure they arrive in time for when you might need them.”
Also, make sure you are registered to vote as this will help lenders verify your identity quickly.
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Find a good conveyancer
Hiring a solicitor who is efficient is crucial if you want to beat the deadline. Stinton suggests you look for someone experienced at handling tight deadlines and prioritise this over getting a cheap price for their services.
“In these circumstances, paying a little more in legal fees for someone who can process your paperwork quickly could save you thousands in tax,” he explained.
“You can even speak to a solicitor before you’ve found a property – they can start some of the checks on your identity while you’re still finding your home.
“It’s likely they’ll need photo ID and address ID – so check with them if they need originals, or if certified copies are acceptable.”
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Book surveys and valuations early
Stinton advises you book surveys and valuations in as soon as your offer is accepted to ensure they progress swiftly. Check out this article which explains more about surveys and how they work.
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Get your deposit ready
Lenders will need to see evidence of your deposit so, if it’s being gifted by a family member, it will require further checks. Let your solicitor know as soon as possible if this is the case.
Even if it’s sitting your bank account, you’ll need to show original copies of bank statements as proof. And for those whose deposit is coming from the sale of your current home, you will need to provide a mortgage statement.
There are certain types of savings accounts which require notice to withdraw the money – so act fast if yours is tied up in one of these. “Being prepped for these things will help avoid delays down the line,” said Stinton.
