How much stamp duty will I pay in 2025?

Homebuyers have benefited from reduced stamp duty rates 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.

Property website Zoopla has warned that if you haven't had an offer accepted and started your legals yet on a purchase, it is unfortunately too late to beat the deadline.

Former chancellor Jeremy Hunt tried to boost the property market in 2022 under the beleaguered Conservative government by temporarily reducing stamp duty thresholds.

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Since October 2022, the property tax has only been due on homes worth more than £250,000 (or £425,000 for first-time buyers).

However, the Labour government has said the tax-free thresholds will revert to their original levels from 1 April 2025, potentially adding thousands of pounds to the cost of moving house.

The change will see the thresholds drop to £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”.

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

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

Over the past year, UK house prices have risen to £289,707 on average, according to official data from HM Land Registry. This leaves the typical buyer with a stamp duty bill in the region of £1,985. Once the thresholds revert to their original levels next year, this will increase to £4,485

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.}

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.

If you purchase a property for less than £500,000, the impact will be far 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?

Zoopla says the average time for an offer being accepted to exchanging contracts is seven weeks, but this sounds optimistic. If you haven't started the process already, it is probably too late. A lot will depend on the length of the chain and who is in it.

First-time buyers can often move more quickly than those who have an existing property to sell, as can cash buyers. However, even then, there is a risk that someone in the chain will pull out and disrupt the process.

“Whether the buyer is in time to meet the stamp duty increase deadline very much depends on where they are in the process, how big the chain is and, critically, how advanced each party is in the chain with their sale or property purchase,” says Dev Malle, chief business development officer at conveyancing firm My Home Move Conveyancing.

He says those starting a new transaction today are very unlikely to meet the deadline.

If you are chain-free or partway through the process already, it could be doable, but an efficient conveyancer will be essential. Patrick Bullick of Stanley Property London, a Chelsea-based estate agent, suggests using “a good private client conveyancing solicitor who you can pin down to personally pursue the transaction”.

Other steps you can take 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 like having your mortgage application approved.
4. Preparing any funds for a timely completion (remember that stamp duty is calculated on the date of completion, not exchange of contracts).