Stamp duty changes and the impact on first-time buyers

Hoping to buy a home in England in the next few months? Then you need to be aware of the stamp duty changes that are due to happen in 2025. First-time buyers in particular will be affected, so read on to find out what to expect and why you need to act fast if you want to save money.

What are the stamp duty rate changes in 2025?

The rates of stamp duty in England are due to change on 31 March 2025. The biggest difference, that will impact most home buyers, is that the threshold at which stamp duty must be paid will be lowered from £250,000 to the previous level of £125,000.

What this means is that house movers will have to pay stamp duty on a greater portion of their home’s value than previously, which will mean paying more overall. If you’re buying your next home to be your main residence, and you complete the purchase after March 2025, you’ll have to pay 2% on the portion of the property’s value between £125,000 and £250,000, and 5% on the next value band.

For example, if you’re a home mover buying a property for £500,000, the stamp duty you’ll pay will rise from £12,500 to £15,000.

Stamp duty for first-time buyers: how much will I pay in 2025?

First-time buyer stamp duty thresholds will also change on 31 March 2025. Currently, those buying their very first property do not need to pay stamp duty on the portion of the property worth up to £425,000, which means that many first-time buyers don’t need to pay any at all. But when the changes come into effect, that threshold will drop to £300,000, meaning many more first-time buyers will have to pay stamp duty.

In addition, first-time buyers currently pay a reduced stamp duty rate on the value of a home up to £625,000. This is known as First-Time Buyers Relief, and it will drop to £500,000 from 31 March 2025, meaning that those buying their first home will pay the same as everybody else on the portion of their home’s value above £500,000.

As a result, the stamp duty rate changes in 2025 are set to have the most impact on first-time buyers. For example, if you’re buying your first home costing £400,000 you would currently not pay any stamp duty at all; however from 31 March 2025 you’d owe £5,000.

To give yourself the best chance of avoiding increased stamp duty rates you should act now, and act fast. You should be aiming to complete your property purchase before 31 March next year, and with the average conveyancing process taking 12 to 16 weeks – and in many cases longer than this – it’s never too soon to get your house-hunt underway.

Browse property for sale in Wiltshire and contact Carter & May to be the first to find out when a suitable home comes on the market.