With stamp duty rates changing in 2025, it’s important to understand the potential impact on your home-buying plans. We break down the key changes, so you’ve got the right knowledge to confidently save for your first home.
What is stamp duty?
Stamp duty, also known as Stamp Duty Land Tax (SDLT), is a tax paid on property or land purchases in England and Northern Ireland. There are similar taxes in Wales and Scotland. As one of the most significant upfront costs when buying a home, it’s essential to understand. SDLT is a progressive tax, meaning the amount you pay increases with the property’s price. Rates also vary based on factors like your first-time buyer status and how you’ll use the property – as your main residence, a second home, or a buy-to-let property.
What’s changing?
Currently, first-time buyers get a discount on stamp duty – there’s no tax to pay on properties up to £425,000. Former Prime Minister Liz Truss introduced the discount in 2022.
But, this will change from April 2025 and rates will return to their previous thresholds. From 1st April 2025, stamp duty will start to be payable on homes valued over £300,000. You’ll no longer get any stamp duty relief if buying a home over £500,000 – previously, the upper limit was £625,000.
Why are the changes happening?
As of August 2024, home-buyers had paid a total of £6.6bn in stamp duty – £100m more than in 2023. It’s a big source of revenue for HM Treasury. The new Labour government has claimed there is a £22bn ‘black hole’ in the public finances. Reducing the stamp duty discounts for first-time buyers would be one way to increase the overall funds raised from taxation and fill this hole.
What could this mean for you?
If you’re planning to buy your first home after 1st April 2025 and it’s priced between £300,000 and £425,000, you’ll now have to budget for stamp duty. If you’re buying a home priced between £425,000 and £500,000, you’ll be hit with an increased stamp duty bill. And, if your first home will cost over £500,000, you’ll pay the same rates as home movers, missing out on any discount.
Stamp duty rates from 1st April 2025:
| Property price | Stamp duty rate |
| 0% | |
| The portion between £300,001 – £500,000 | 5% |
| The portion over £500,000. | No discount – home mover rates apply |
Here’s an example:
On 31st March 2025, you buy your first home for £400,000. Thanks to the stamp duty discount for first-time buyers, you won’t pay any stamp duty at all. But, if your home purchase completes on 1st April 2025, you’ll pay £5,000 in stamp duty:
- 0% on the first portion up to £300,000 = £0
- 5% on the remaining portion of £100,000 = £5,000
How to plan ahead
While these changes might sting a little, there’s still time to plan ahead. If you’re hoping to take advantage of the current stamp duty discounts, aiming to complete your purchase before 1st April 2025 could be a savvy move.
If this isn’t an option for you, your best bet is to start saving for stamp duty, using a high-interest savings account you can access when you need to. A Cash ISA could be a great option for this! With the Moneybox Cash ISA, you can earn 5.02% (AER) variable, tax-free.*
*Rate as of 30/12/2024 and subject to conditions, includes bonus rate for first 12 months. ISA and tax rules apply. Other accounts are available.
If you’re unsure how these changes might affect your situation, getting advice from a qualified financial adviser or mortgage broker is a great place to start. With Moneybox Mortgages – our mortgage broker service – you can get free mortgage advice from expert brokers, plus access to deals from over 90 lenders. Head in-app to chat to a broker.
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We’re here to help
As always, we’re here to support you on your home-buying journey, from first step to doorstep. Keep an eye on our blog for more updates and helpful tips to confidently navigate the process.
*New customer rate as of 05/02/2025. 5.02% AER (variable) includes a bonus rate of 0.57% for the first 12 months. A lower rate of 0.75% AER (variable) applies if account conditions aren’t met. Interest is accrued daily and paid into your account yearly on the date you opened your Cash ISA. The rate is variable, and we’ll inform you if it changes. Tax treatment depends on individual circumstances and may be subject to change in the future.