There has been much discussion and debate regarding the raft of tax changes in the recent budget, and which are already in force. There are, however, several changes to Stamp Duty Land Tax already announced, but which do not come into force until 1 April 2025.
SDLT is a tax paid by the buyer of a property in England and Wales (although in Wales it is called Land Transaction Tax). As the legislation differs slightly between England and Wales, the remainder of this article will focus exclusively on England.
SDLT must be paid within 14 days of completion of a purchase. Therefore, a conveyancer will request the payment from the buyer ahead of completion. Without the certificate issued by HMRC confirming payment it is not possible to register the property in the purchaser’s name at Land Registry.
There has already been an immediate increase in the rates paid by the buyers of second properties, but there are 2 major changes scheduled to come into force next April.
For all buyers the nil rate band is being reduced from £250,000 to £125,000. Thus, all purchasers will pay SDLT on any property bought for £125,001 or more. Presently the rates are 2% of the purchase price on a property bought for between £125,001 and £250,000, and 5% of that portion of the purchase price from £250,001 to £950,000. Therefore, whereas a buyer may buy a property for £240,000 now and not pay SDLT, from 1 April 2025 there will be a bill of £2,300.
Secondly, the increased nil rate band for first-time buyers is being reduced from £425,000 to £300,000. A first-time buyer is defined as a person who has never previously owned a property. At the moment, a first-time buyer may purchase a property for £325,000 and not pay any SDLT; from 1 April 2025 there will be a bill of £5,750.
As the average conveyancing transaction takes around 3 months from time of instruction to completion, buyers may find it advantageous to start considering looking at new properties earlier in the year than has traditionally been the norm.
The above article is the personal view of the author and should not be relied upon for tax or legal advice. For all your conveyancing needs, contact Lewis Francis Blackburn Bray solicitors on info@lfbbsolicitors.co.uk
Ian Clay
Lewis Francis Blackburn Bray solicitors