UK property tax update 2025
The UK property tax landscape has undergone significant changes over the past year or so, particularly impacting England. These adjustments were introduced in the Spring Budget 2024, but it is only now that we are seeing their impact hit home. These changes claimed to address housing availability, tax fairness, and market dynamics. Here’s a comprehensive overview of the key changes:
Stamp Duty Land Tax (SDLT) Adjustments
Threshold Reversions:
As of April 1, 2025, the SDLT thresholds have reverted to their pre-2022 levels:(Landlord Vision)
- First-Time Buyers: The nil-rate band has decreased from £425,000 to £300,000.
- General Threshold: The standard nil-rate band has returned from £250,000 to £125,000.(Reuters, Latest news & breaking headlines)
This change led to a surge in property transactions in March 2025, as buyers rushed to complete purchases before the new thresholds took effect. (Latest news & breaking headlines)
Higher Rates for Additional Dwellings (HRAD):
From October 31, 2024, the surcharge for purchasing additional properties increased from 3% to 5%. This move aims to deter speculative investments and free up housing stock for first-time buyers. (Property Professionals)
Abolition of Multiple Dwellings Relief (MDR)
Effective June 1, 2024, the MDR, which allowed buyers purchasing multiple properties in a single transaction to calculate SDLT based on the average price per dwelling, has been abolished. This change is expected to impact landlords and investors who previously benefited from reduced SDLT liabilities when acquiring property portfolios. (Landlord Vision)
Changes to Furnished Holiday Lettings (FHL) Tax Regime
Starting April 2025, the FHL tax regime will be abolished. Previously, landlords of furnished holiday lets enjoyed tax advantages, such as offsetting mortgage interest and claiming certain capital gains tax reliefs. The removal of these benefits aims to encourage landlords to offer properties for long-term rentals, thereby increasing housing availability for local residents. (Whitley Stimpson, Which?)
Capital Gains Tax (CGT) Rate Reduction
From April 6, 2024, the higher rate of CGT on residential property sales decreased from 28% to 24%. This reduction applies to gains from the sale of buy-to-let properties or second homes, not primary residences. The government anticipates that this change will incentivise property sales, increasing housing supply. (Which?)
And.. remember if you have a capital gain on a residential property sale (other than your principle private residence) then you have only 60 days from the point of sale to report the gain and pay over any CGT to HMRC.
Business Rates and Empty Property Relief
Empty Property Relief Reset Period:
As of April 1, 2024, the reset period for Empty Property Relief has been extended from six weeks to thirteen weeks. This extension aims to prevent the practice of briefly occupying properties to reset the relief period, thereby encouraging the more consistent use of commercial properties. (StuRents.com)
Market Implications
The reversion of SDLT thresholds and the abolition of tax reliefs have led to a temporary slowdown in the housing market, with a notable 0.6% drop in house prices in April 2025—the largest monthly decline since August 2023. However, experts predict that the market will gradually recover over the summer months, supported by factors such as falling mortgage rates and stable employment levels. (Reuters, Financial Times)
Navigating the Changes
For prospective buyers, landlords, and investors, these tax changes underscore the importance of staying informed and seeking professional advice when navigating the property market. While some measures may increase upfront costs or reduce tax benefits, they also aim to create a more balanced and accessible housing market in the long term.
In summary, the recent property tax reforms in England reflect the government’s efforts to address housing challenges and promote fairness in the tax system. As the market adjusts to these changes, stakeholders should remain vigilant and adaptable to make informed decisions in the evolving landscape.
If you have any questions on how these changes may affect you please do not hesitate to contact us HERE
