How much stamp duty will I pay in 2025?

Homebuyers have benefited from reduced stamp duty in recent years but thresholds for the controversial property tax are set to drop at the start of April, meaning many buyers will pay more when making a purchase.

Since October 2022, stamp duty has only been due on homes worth more than £250,000, or £425,000 for first-time buyers. However, these thresholds will drop back to their original levels from 1 April – £125,000 for regular buyers and £300,000 for first-time buyers.

Alice Haine, personal finance analyst at investment platform Bestinvest, says the changes will “deliver a particularly heavy hit to first-time buyers, who will not only need to raise enough money for a deposit but also enough to cover the higher tax bill”.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Those who live in areas like London and southern England, where house prices are highest, could also be hit disproportionately.

Bank and mortgage lender Santander recently reported a 130% increase in mortgage applications in the final quarter of 2024 (versus the same period a year before), as buyers rushed to beat the deadline.

However, unfortunately, it is now too late to move before 1 April if you haven't already had an offer accepted and started the legal process.

What do April’s stamp duty changes mean for you?

Over the past year, UK house prices have risen to £290,000 on average, according to official data from HM Land Registry. This leaves the typical buyer (i.e. someone who has owned a property before) with a stamp duty bill in the region of £2,000. Once the thresholds revert to their original levels next year, this will increase to £4,500.

Naturally, those purchasing a more expensive property will face an even larger bill. The average property in London costs more than £510,000, resulting in a stamp duty bill of around £13,000 at current thresholds. From April, this will also rise by £2,500 to a whopping £15,500.

For this reason, property website Zoopla has previously said stamp duty is “essentially a tax on moving home in southern England”.

HMRC data shows that 78% of stamp duty revenue comes from the southern part of the country (London, the South East, the South West and the East of England), with 58% coming from London and the South East alone.

^{Based on average house prices from HM Land Registry as of November’s report, published on 15 January 2025. Calculations assume the buyer has owned a property before and does not qualify for first-time buyer relief.}

How will stamp duty changes impact first-time buyers?

The government gives first-time buyers some additional relief to help them climb the first rung of the ladder. Under current rules, they don’t have to pay any stamp duty on the first £425,000 of the property. This threshold will drop to £300,000 from April.

There are limits on this relief, though. Under current rules, you cannot claim first-time buyer relief if the value of the property exceeds £625,000. From April, this will drop to £500,000. Unlike some other tax allowances, this one isn’t tapered. It disappears entirely once you cross the threshold.

As a result, buyers in pricey areas like London could see a particularly sharp spike in their tax bill, as the average property price in the region is higher than the new £500,000 threshold. This means some won’t qualify for any first-time buyer relief at all.

The difference this could make to a tax bill is staggering. A first-time buyer purchasing an average-priced house in London (£510,000) will go from paying £4,250 in stamp duty today, to £15,500 from 1 April.

Against this backdrop, rising stamp duty costs could add to a growing trend of first-time buyers being forced out of their current neighbourhood. Two-thirds of Brits who bought their first home in the last two years had never seen the neighbourhood before buying, according to recent research from Santander.

If you purchase a property for less than £500,000, the impact of the upcoming changes to first-time buyer relief will be less dramatic. Using the government’s stamp duty calculator can help you understand how much the changes will impact you.

Is there enough time to move before stamp duty changes?

Comparison site Compare My Move says it takes between 12 weeks and six months to move house, on average. This means you are too late to beat the deadline if you haven’t started the process already. Property website Zoopla also issued a warning to this effect at the end of January.

Those who are partway through their conveyancing could still complete before the deadline, however the length of the process can vary widely depending on your personal circumstances. Those with a short chain may find the process quicker than those who are relying on several other parties.

Some steps you can take to boost your chances of a speedy exchange and completion include:

1. Making sure you provide your solicitor with any necessary documentation promptly.
2. Maintaining frequent communication to avoid delays and misunderstandings.
3. Getting ahead with any admin such as having your mortgage application approved (this can take several weeks).
4. Preparing any funds for a timely completion (remember that stamp duty is calculated on the date of completion, not exchange of contracts).