As any property developer knows, purchasing property is no small decision. Aside from location, value, finances and repayment plans, you also need to be aware of your responsibilities when it comes to paying taxes.
To stay on the right side of the law, it’s essential to be mindful of the taxes you need to pay and any exemptions you might be eligible for. Failing to pay your taxes as a property owner can lead to fines and penalisation.
When you purchase real estate at a specific price in England or Northern Ireland, you must pay stamp duty land tax (SDLT). The SDLT rates 2025 will change from April 1st, so if you want to learn about the new stamp duty land tax, keep reading.
Need help with compliance, paperwork and financial planning for your property or apartment block? Contact us at Habitare today.
What is Stamp Duty Land Tax?
Stamp duty land tax submission is a requirement for properties that exceed a predetermined valuation. If the property is valued below the specified amount, you won’t have to pay the SDLT.
You’re required to pay SDLT when purchasing a freehold property, new or existing leasehold, shared ownership scheme property, transferred land, or property for money, or when you’re taking on a mortgage or buying a share in a house.
If you’re buying a property before 31st March, then the threshold for SDLT rates in 2025 is as follows:
- For residential properties, the threshold limit starts at £250,000
- For those who are buying property for the first time, the threshold stands at £425,000
- For non-residential land and properties, the threshold valuation starts at £150,000
A new stamp duty land tax rate will come into play from 1st April 2025. Let’s take a look at the new SDLT rates.
SDLT Thresholds in 2025
If you’re wondering how much the stamp duty land tax will be from April 2025, you’ll find out now. The revised SDLT threshold is:
- For residential properties, the revised rates are £125,000
- For first-time buyers, the threshold starts at £300,000
- For non-residential land and properties, the threshold valuation remains unchanged (£150,000)
If you’re confused and need stamp duty land tax advice, speak to a professional tax consultant or accountant.
What is the SDLT on Residential Property Purchase?
As per the new stamp duty land tax rate applicable from April 1st, you pay 0% tax on a residential property below the threshold of £125,000.
When the property price exceeds £125,000 but is within £250,000, the SDLT rate is capped at 2%. If the property is priced within £925,000, you pay 5% tax. For a property valued within £1.5 million, the SDLT rate is at 10%. For properties above £1.5 million, tax is levied at 12%.
Let’s look at an example:
In April 2025, when you buy a property for £350,000, no tax will be calculated until you’ve paid the first £125,000. You’ll then pay 2% tax on the next £125,000, which amounts to £2,500. For the next £50,000, you pay a 5% tax amounting to £2500. The total new stamp duty land tax will be £7,500.
When you buy an investment property or a second home, the stamp duty rates for residential properties change. If the new building is valued at over £40,000, the residential property rates will include an additional 5% surcharge on the standard SDLT rates.
You can also use the UK government’s stamp duty land tax calculator to find the exact amount payable.
A 2% surcharge is applied to the standard SDLT rate for international or overseas buyers.
Reliefs and Exemption for SDLT
HMRC offers certain tax relief and exemption opportunities on the new stamp duty land tax rates. You may be able to save money on SDLT if you’re:
- A first-time buyer
- A construction company buying a private home
- An employer buying their employee’s home
- A local authority making compulsory purchases
- A developer building public amenities
- A charity purchasing real estate
- A company transferring real estate holdings
- Buying right-to-buy properties
- A registered social housing provider
- An employee of the Crown
- Using property investment funds such as PAIFs or CoACS
You don’t have to pay SDLT if:
- You receive a property in a will as an inheritance
- The property is transferred but without any financial transaction
- The property is transferred as part of a divorce settlement
- You’re buying freehold property that’s valued at less than £40,000
- You buy a new lease or repurchase one for a tenure of 7 years or more, where the premium is less than £40,000 and the annual rent is below £1,000
- You buy a new lease or repurchase one but the amount is below the stamp duty rates residential property
- You have an alternative property financial arrangement like the Sharia Law
One important piece of stamp duty land tax advice is to submit the SDLT return even if you don’t need to pay any tax. Additionally, if you own multiple properties, you can no longer claim SDLT relief.
How and When to Pay Stamp Duty Land Tax
If you’re buying real estate in England, the new stamp duty land tax submission must be paid within 14 days. If you don’t pay within this timeline, you may need to pay a fine, or interest might be levied on the tax payable.
You can pay through an online bank account, debit or credit card, cheque, or bank transfer.
Contact Habitare for Assistance With Documentation and SDLT Calculation
If you’re buying a new freehold property, it’s important to know the new stamp duty land tax regulations. At Habitare, we have an in-house accounts team that can help property owners and leaseholders calculate the right tax amount due and stay compliant with other property-related regulations.
Our secretarial team stays updated with the latest regulations, assists with the necessary paperwork, and ensures you submit your returns on time. Our block property management services aren’t just limited to property inspections, maintenance and emergency repairs. We offer comprehensive services that make block property management easy, efficient, and effective.
Contact us today to learn more about our range of services.