How Much Stamp Duty Will First-Time Buyers Pay in 2025?

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• Posted on 5th March 2025
• Category: Property Blog

As of April 1, 2025, first-time buyers in England and Northern Ireland will see changes to the stamp duty threshold. The tax-free threshold will decrease from £425,000 to £300,000, meaning many first-time buyers may face higher costs when purchasing their new home.

What is Stamp Duty?

Stamp duty is a tax that buyers pay when purchasing a property or land in England and Northern Ireland. It is calculated based on the purchase price, with different tax bands applying. This tax is not paid by sellers.

Current Stamp Duty Rates for First-Time Buyers (Until March 31, 2025)

Currently, first-time buyers benefit from a higher tax-free threshold:

• No stamp duty on properties up to £425,000.
• For properties priced between £425,001 and £625,000, first-time buyers pay 5% on the portion above £425,000.
• If a property costs more than £625,000, first-time buyers pay standard stamp duty rates.

Example Calculation: For a first-time buyer purchasing a home for £500,000:

• No stamp duty on the first £425,000.
• 5% stamp duty on the remaining £75,000 = £3,750.
• Total stamp duty payable: £3,750.

New Stamp Duty Rates for First-Time Buyers (From April 1, 2025)

From April 1, 2025, the tax-free threshold for first-time buyers will be reduced to £300,000:

• No stamp duty on properties up to £300,000.
• For properties priced between £300,001 and £500,000, first-time buyers pay 5% on the portion above £300,000.
• If a property costs more than £500,000, first-time buyers pay standard stamp duty rates.

Example Calculation: For a first-time buyer purchasing a home for £500,000 after April 1, 2025:

• No stamp duty on the first £300,000.
• 5% stamp duty on the remaining £200,000 = £10,000.
• Total stamp duty payable: £10,000.

Stamp Duty Rates for Regular Buyers in 2025

For non-first-time buyers (home movers), the stamp duty-free threshold will revert from £250,000 to £125,000 from April 1, 2025. The new stamp duty bands will be:

• 0% on the first £125,000.
• 2% on the portion between £125,001 and £250,000.
• 5% on the portion between £250,001 and £925,000.
• 10% on the portion between £925,001 and £1.5m.
• 12% on any amount above £1.5m.

Who Qualifies as a First-Time Buyer?

To qualify for first-time buyer stamp duty relief, you must:

• Have never previously owned a property in the UK or abroad.
• Use the property as your main residence.
• If purchasing jointly, both buyers must be first-time buyers.

Additional Stamp Duty for Second Homes and Buy-to-Let

Buyers of second homes or buy-to-let properties must pay an additional 3% on top of standard stamp duty rates. Non-UK residents buying property in England or Northern Ireland also face a 2% surcharge.

When is Stamp Duty Paid?

Stamp duty must be paid within 14 days of completion. Solicitors or conveyancers usually handle the payment and file the necessary returns with HMRC.

Can Stamp Duty Be Paid in Installments?

Generally, stamp duty is paid as a one-time lump sum. However, buyers of Shared Ownership properties may have the option to pay in stages.

What’s Next?

With the upcoming changes, first-time buyers should carefully assess their budgets and factor in potential stamp duty costs. If you’re considering purchasing a home in 2025, seeking advice from a mortgage advisor or estate agent can help you plan accordingly.

For further details on stamp duty changes, visit the UK Government’s official website or consult with us for expert guidance on navigating the property market.

Adapted from Zoopla

Thanks for reading

Michael