The recent Labour budget has introduced several updates to Stamp Duty Land Tax (SDLT) that are likely to impact first-time buyers, homeowners, and those investing in additional properties.
In this article, we break down the key updates, illustrating how they could affect your property purchases.
Whether you’re buying your first home, relocating, or expanding your property portfolio, these insights will help you prepare. For medical professionals navigating busy careers and complex finances, understanding these new SDLT rules is crucial for effective tax and investment planning.
First time buyers
SDLT is a tax which is payable by the purchaser of a property (as a lump sum on completion).
For individuals looking to purchase their first home, a first time buyers’ relief exists.
At the time of writing, for a UK resident first time buyer, purchasing a home up to a maximum value of £625,000 the relief means than no SDLT will be paid on the first £425,000, and 5% will be paid on the excess between £425,001 and £625,000.
As a result of the budget, from 1 April 2025 this relief will operate to different threshold. To be eligible for the relief, the maximum value of property will be lowered to £500,000. No SDLT will be payable on the first £300,000 of the property value only, and the excess between £300,001 and £500,000 will now be charged at 5%.
This will mean that the scope of properties eligible for the relief will be less, and the cost of purchasing a first home may well increase (depending on the value of the home you’re looking to buy).
Those moving home
SDLT thresholds for those who already own a home, but are moving to a new residence, are also changing.
Presently, up to £250,000 of the value of a home is charged to SDLT at 0%, with the value between £250,000 and £925,000 being charged at 5%.
From 1 April 2025 only the value up to £125,000 will remain at 0%, with the value between £125,001 and £250,000 being taxed at 2% (and the other rates and thresholds remaining the same). For someone purchasing a new home in excess of £250,000, this will add around an extra £2,500 on to the cost of the move.
Those purchasing a second home
Whether you purchased a home during training, let it out during rotation and have settled on buying a new home somewhere else, or you have specifically entered into the market to purchase a dedicated buy-to-let investment, the SDLT surcharge on second homes has been increased with effect from 31 October 2024.
Up to 30 October 2024 the surcharge was 3% on top of the normal rates. From 31 October 2024 the surcharge is now 5% on top of the normal rates (with the banding changes mentioned above, also in effect from 1 April 2025).
In short, the cost of investing in land and property has just increased quite significantly!
If you have any questions or would like to discuss Tax planning, get in touch with our team of specialist medical accountants on 01424 730345 or email doctors@honeybarrett.co.uk and they will be happy to help.
