Stamp obligation on common dwelling may rise to £4,669

Someone purchasing an average-priced home in England and Northern Ireland could see their stamp duty bill more than double from March next year, as Labour is set to rule out any changes to the tax in the Budget. 

The amount owed on a typical home could go from £2,169 to £4,669, based on the average price of £293,299 in the latest Halifax house price index.

Home movers currently pay stamp duty if their home costs more than £250,000, but in March 2025 this will drop back to £125,000 – the level it was at before temporary changes were made in the 2022 mini-Budget.

Labour had been urged to consider freezing the tax at its current levels, but it is understood that the Chancellor has decided against this.  

Off the table: Rachel Reeves looks set to ignore stamp duty in the upcoming Budget

Since late 2022, a first-time buyer purchasing a property up to the value of £425,000 has paid no stamp duty. If their home is more expensive, they only pay the tax on the portion above £425,000.

However, this limit, which has been at its current level since 2022, is due to drop back to the old threshold of £300,000 from 31 March 2025. 

This means the same £425,000 purchase will be subject to a £6,205 tax bill when stamp duty rates return to previous levels.

Tim Bannister, a property expert at Rightmove said: ‘This will no doubt be seen as an unwelcome additional cost by many buyers looking to make their move in 2025 – and potentially to those currently in the process.

‘With the threshold for the nil rate, the rate at which no stamp duty is charged for home-movers, due to fall from £250,000 to £125,000, anyone purchasing a property over this amount could face paying up to £2,500 more in stamp duty land tax. 

‘Meanwhile, the threshold rate at which first-time buyers do not pay stamp duty is likely to fall from £425,000 to £300,000. 

Property expert: Tim Bannister of Rightmove

‘If a first-time buyer buys a property at the average UK asking price of £370,759 they will pay £3,538 in stamp duty from March 2025, compared with nothing now.’

The average asking price is significantly higher than the average sale price. 

Rightmove says that at current thresholds, 58 per cent of properties are exempt from stamp duty for first-time buyers. 

If the threshold is reduced, only 37 per cent of homes would remain stamp duty-free, a 21 per cent reduction. 

This will particularly affect buyers in regions with higher property prices, such as London and the South East. 

Bannister expects many people will try to push through their purchases to avoid the extra cost.

He adds: ‘We’re likely to see a rush to complete property transactions before the stamp duty changes come into effect, as buyers look to avoid the additional costs, meaning a busier Christmas and New Year for the housing market. 

‘The average time it takes to complete a sale from the moment an offer is accepted is currently 152 days. 

‘Coincidentally, this is the same number of days between the Budget on 30 October 2024, and the proposed stamp duty deadline on 31 March 2025. 

‘This means that, on average, buyers that agree to a purchase after the Budget may not complete in time unless all involved in the transaction are working together to speed up the process.’