TAXING TIMES
First-time buyers WILL face stamp duty rise next year Budget document reveals as second-homes also hit
It's bad news for other homebuyers too
MILLIONS of first-time buyers face a huge blow after the Treasury confirmed stamp duty thresholds will fall next spring.
None of the stamp duty relief available to first-time buyers since 2022 will be made permanent, The Sun can reveal.
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As a result, from April 2025, a first-time buyer purchasing a property valued at £425,000 will incur a stamp duty charge of £6,250.
Stamp duty is one of the additional upfront costs that purchasers may incur when buying a property.
Currently, first-time buyers are exempt from paying stamp duty on properties priced up to £425,000.
If a property is more expensive, they only pay tax at 5% on the portion above £425,000 and up to £625,000.
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As a result, 80% of first-time buyers are not liable for any stamp duty, while only 14% are required to pay a reduced rate, according to property site Zoopla.
The "trick and treat" Halloween package included:
- A freeze to fuel duty for a 15th consecutive year in a win for The Sun's Keep It Down campaign
- A penny off a pint by cutting draught beer duty, but raising booze taxes on other drinks
- A gloomy forecast of sluggish growth in a blow to Labour's flagship mission
- A stamp duty rise for second-home buyers of two percentage points
- A pay rise for millions as the minimum wage was increased by £1,400 a year
- A hike to a packet of cigarettes as smoking duties were raised
- A new tax on vapes ahead of the looming ban on disposable e-cigs
- Higher taxes on air passenger duty for private jets that hits the wealthy
- A benefits crackdown with Ms Reeves telling jobless Brits to "get back to work"
- An increase to the state pension of £473 next year through the triple lock
- An inheritance tax raid through freezing the rates people pay
- An increase to the Carer's Allowance to give cash to 60,000 more carers
The lower limit for first-time buyer stamp duty exemption was temporarily increased back in 2022 from £300,000 to £450,000.
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The maximum value of a property on which first-time buyers' relief also rose from £500,000 to £625,000.
Similarly, the threshold at which all other buyers begin to pay stamp duty was raised from £125,000 to £250,000.
These thresholds were set to revert to their previous levels in April 2025 unless the government decided to extend them.
Unfortunately, the Treasury has confirmed that the current thresholds will revert to their original levels next spring.
It's a huge blow for all home buyers and means they have just months left to get a sale across the line before the thresholds at which stamp duty becomes payable fall.
As a result, buyers will need to pay stamp duty on 93% of properties for sale in England from April 2025.
Guy Gittins, chief executive of estate agents Foxtons, said: "Homebuyers will be understandably disappointed, but not surprised, about the lack of a stamp duty relief extension, with the current thresholds set to revert back as of March next year.
"However, as they have already factored this into their purchase plans we do not expect it to impact the strong demand we’re currently seeing in the market."
SUN MONEY ANALYSIS
IN a bitter blow for first-time buyers, the stamp duty threshold will fall back to £300,000 in April.
explains what it means for prospective buyers.
It was hoped the Chancellor would make the current higher exemption of £425,000 permanent after it was raised in 2022, however, Rachel Reeves decided against the move.
Buyers now face a race against the clock if they want to avoid paying more when taking their first step on the property ladder.
A first-time buyer purchasing a £425,000 property today won’t pay any stamp duty but after April next will face a bill of £6,250.
The government estimates that an increase in second home stamp duty will support an extra 130,000 purchases by first-time buyers.
But this could be small comfort for buyers faced with having to save thousands of pounds extra to pay stamp duty
What else is changing?
In the Autumn Statement today, Ms Reeves revealed that second-home buyers will face a stamp duty land tax surcharge rise of two percentage points – to 5% – starting from tomorrow.
Speaking in the Commons, Ms Reeves said: "In our manifesto, we committed to reforming stamp duty land tax to raise revenue while supporting those buying their first home.
“This will support over 130,000 additional transactions from people buying their first home, or moving home, over the next five years."
Richard Donnell, head of research and insight at Zoopla said of the stamp duty change: "The extra 2% cost on buying second homes and investment property will reduce demand from second home buyers and investors.
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"Second home buyers are already responding to last year’s Budget which allowed councils to charge double council tax for second homes.
"This is resulting in a higher level of selling by second home owners. In areas with above average second homes we have seen four times more homes come to the market."
What is stamp duty?
STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.
You pay the tax when you:
- Buy a freehold property
- Buy a new or existing leasehold
- Buy a property through a shared ownership scheme
- Land is transferred to you or property in exchange for payment, for example, you take on a mortgage or buy a share in a house
The rate you pay depends on the price and type of property and certain thresholds.
If you are a first-time buyer no stamp duty is due if the property is worth £425,000 or less.
You'll also get a discount if the purchase price is £625,000 or less and will only pay 5% SDLT on the portion from £425,001 to £625,000.
Those who aren't first-time buyers will pay different rates depending on the value of their new home:
- If it's up to £250,000 - no stamp duty is paid
- For the next £675,000 (the portion from £250,001 to £925,000) - stamp duty is charged at 5%
- For the next £575,000 (the portion from £925,001 to £1.5million) - stamp duty is charged at 10%
- For the remaining amount (the portion above £1.5million) - stamp duty is charged at 12%
For example, if you are buying a home worth £300,000 you would pay stamp duty at a 5% rate on the £50,000 - £2,500.
You'll usually have to pay 5% on top of SDLT rates if buying a new residential property means you’ll own more than one.
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