Changes to SDLT Nil Rate Threshold: What You Need to Know
Starting 1st April 2025, there will be additional changes that were not mentioned in the budget as a result of the ending of a temporary relief period initially introduced in September 2022.
It is important to understand these changes and how they impact the Stamp Duty Land Tax (SDLT) position on residential property purchases.
Background: The 2022 Stamp Duty Land Tax (SDLT) Changes
In September 2022, the UK Government introduced temporary changes to the SDLT nil rate threshold as part of a broader effort to stimulate the housing market and support buyers during a challenging economic period.
These changes increased the nil rate SDLT threshold for residential property purchases from £125,000 to £250,000. For first-time buyers, the nil rate threshold was raised from £300,000 to £425,000 for properties with a purchase price of up to £625,000.
These measures provided savings for residential property purchasers, particularly those who qualified as first-time buyers.
From 1st April 2025: Reversion to Pre-2022 Levels
The nil SDLT threshold and first-time buyers’ relief thresholds will return to their pre-September 2022 levels:
- The nil rate threshold for residential property purchases will revert to £125,000.
- For first-time buyers, the nil rate threshold will return to £300,000 for properties with a purchase price of up to £500,000. For properties exceeding £500,000, standard SDLT rates will apply.
Unlike the rate changes announced in the October 2024 budget, which allowed for the pre-budget rates to apply (broadly) for transactions that had exchanged contracts before 31 October 2024, the reversion to pre-2022 level will take effect for transactions with an effective date (usually the date of completion) on or after 1st April 2025.
Tax Impact
Under the current rules, an individual, with no other properties, purchasing a property for £250,000 would have no SDLT to pay. However, from 1 April 2025, the same purchase would give rise to an SDLT liability of £2,500.
For a first-time buyer purchasing a property for £425,000 would currently pay no SDLT. However, from 1st April 2025, the same purchaser would incur SDLT of £6,250.
With the Spring Statement due on 26th March 2025, there may be additional SDLT surprises to consider.
How We Can Help?
The SDLT changes add an additional layer of complexity to already complex rules. At Affinia, our dedicated Property Taxes team offers clear, tailored advice for individuals and corporate purchasers across all areas of residential and commercial property planning.
If you have any queries regarding the upcoming SDLT changes or if you would like to explore any property related tax planning opportunities, get in touch, [email protected] and a member of the team will be pleased to help.
