Significant changes to Stamp Duty Land Tax (SDLT)

Key Changes to Stamp Duty

As of April 1, 2025, significant changes to Stamp Duty Land Tax (SDLT) will come into effect, impacting homebuyers in Cambridge and across the UK. These adjustments, announced in the October 2024 UK budget, aim to modify the tax landscape for property purchases.

1. Standard Residential Purchases:

   • The nil-rate threshold will decrease from £250,000 to £125,000.
     gov.uk
   • New SDLT rates from April 1, 2025:
     • Up to £125,000: 0%
     • £125,001 to £250,000: 2%
     • £250,001 to £925,000: 5%
     • £925,001 to £1.5 million: 10%
     • Above £1.5 million: 12%

   Example: Purchasing a property at £295,000 will incur:

   • 0% on the first £125,000 = £0
   • 2% on the next £125,000 (£125,001 to £250,000) = £2,500
   • 5% on the remaining £45,000 (£250,001 to £295,000) = £2,250
   • Total SDLT: £4,750
     
     

2. First-Time Buyers:

   • The nil-rate threshold will reduce from £425,000 to £300,000.
     gov.uk
   • First-time buyers will pay:
     • 0% on the first £300,000
     • 5% on the portion between £300,001 and £500,000
   • Properties priced over £500,000 will not qualify for first-time buyer relief.

   Example: A first-time buyer purchasing a property at £500,000 will incur:

   • 0% on the first £300,000 = £0
   • 5% on the remaining £200,000 = £10,000
   • Total SDLT: £10,000
     
     

3. Additional Properties (Investors and Second Homeowners):

   • An additional 5% surcharge applies on top of standard rates.
     togethermoney.com

   Example: Purchasing an additional property at £295,000 will incur:

   • Standard SDLT: £4,750
   • Additional property surcharge (5% of £295,000): £14,750
   • Total SDLT: £19,500
     
     

Impact on the Cambridge Property Market:

Cambridge's property market, known for its robust demand and premium property values, will feel the effects of these SDLT changes. First-time buyers, in particular, may face increased financial challenges due to the reduced relief thresholds. Investors and those purchasing additional properties will also experience higher tax liabilities, potentially influencing investment decisions in the area.

Recommendations for Prospective Buyers:

• Assess Financial Readiness: Understand the new SDLT obligations and incorporate them into your budgeting plans.
• Expedite Transactions: If possible, aim to complete property purchases before April 1, 2025, to benefit from the current SDLT rates.
• Consult Professionals: Engage with local estate agents and financial advisors to navigate these changes effectively.

At Hockeys we are committed to guiding our clients through these upcoming changes. Our team is ready to provide personalized advice to help you make informed decisions in this evolving landscape.