The recent UK Budget announced significant changes to property taxes, including Stamp Duty Land Tax (SDLT) in England and Northern Ireland, the Land and Buildings Transaction Tax (LBTT) in Scotland, and the Land Transaction Tax (LTT) in Wales. These changes, effective from April 2025, will have far-reaching implications for doctors planning property purchases.
Here, we explore the changes, the new rates and thresholds, and provide practical tips for navigating this new landscape.
Key changes to property taxes
England and Northern Ireland: Stamp Duty Land Tax (SDLT)
From April 2025, SDLT thresholds will tighten, raising tax costs for many buyers, especially for additional properties.
Current SDLT rates and thresholds for primary residences:
- 0% on properties up to £250,000 (£425,000 for first-time buyers).
- 5% on the portion of the price between £250,001 and £925,000.
- 10% on the portion of the price between £925,001 and £1.5 million.
- 12% on the portion above £1.5 million.
Current SDLT rates for additional properties (e.g., buy-to-let or second homes):
- Standard SDLT rates plus a 5% surcharge on each band.
Post-April 2025 changes:
- The 0% threshold will revert to £125,000 for non-first-time buyers.
- First-time buyer relief will remain unchanged.
- The 3% surcharge for additional properties will increase to 5%, making buy-to-let investments significantly more expensive.
Scotland: Land and Buildings Transaction Tax (LBTT)
Scotland will see revisions to LBTT rates for both primary and additional properties.
Current LBTT rates for primary residences:
- 0% on properties up to £145,000 (£175,000 for first-time buyers).
- 2% on the portion between £145,001 and £250,000.
- 5% on the portion between £250,001 and £325,000.
- 10% on the portion between £325,001 and £750,000.
- 12% on the portion above £750,000.
Current LBTT rates for additional properties:
- Standard LBTT rates plus a 4% surcharge on each band.
Post-April 2025 changes:
- Rates in the 5% and 10% bands will increase by 1 percentage point.
- The additional property surcharge will rise to 6%, increasing costs for buy-to-let investors and second-home buyers.
Wales: Land Transaction Tax (LTT)
Wales will also increase rates for both primary and additional properties.
Current LTT rates for primary residences:
- 0% on properties up to £225,000.
- 6% on the portion between £225,001 and £400,000.
- 7.5% on the portion between £400,001 and £750,000.
- 10% on the portion between £750,001 and £1.5 million.
- 12% on the portion above £1.5 million.
Current LTT rates for additional properties:
- Standard LTT rates plus a 4% surcharge on each band.
Post-April 2025 changes:
- The 0% threshold will increase slightly to £250,000 for primary residences.
- Rates in the 7.5% and 10% bands will increase by 1 percentage point.
- The additional property surcharge will rise to 6%, adding substantial costs for second-home buyers.
What these changes mean for doctors
As a doctor, you may face unique circumstances:
- Relocating for work: Higher property taxes could increase costs if moving after April 2025.
- Upgrading your home: Moving to accommodate a growing family or work-life balance may require careful planning.
- Buying investment properties: Additional property purchases will be even more costly post-2025.
Things to consider before April 2025
1. Push through property purchases early
Completing property transactions before April 2025 will allow you to lock in current tax rates, potentially saving thousands of pounds.
2. Save for a higher deposit
With higher taxes and tightening affordability criteria, lenders may require larger deposits. Begin budgeting now to prepare.
3. Review your investment strategy
If you’re purchasing additional properties, consider the long-term impact of increased taxes on your rental yield and profitability.
4. Seek professional advice
Consulting a financial adviser can help you understand the implications of these changes and how to plan accordingly.
Final thoughts
Property tax changes are inevitable, but acting early and planning effectively can help mitigate the financial impact. Whether you’re relocating for work, upgrading your home, or investing, it’s important to be proactive.
For tailored advice, contact us at Chase de Vere. Our specialist mortgage advisers understand the unique needs of doctors and can help you make informed decisions. By preparing now, you can confidently navigate these changes and secure the best outcomes for your financial future.
Your home may be repossessed if you do not keep up repayments on your mortgage. Mortgage availability is subject to status and lender criteria. Chase de Vere does not offer legal or tax advice; you should seek advice from a qualified solicitor or tax adviser on such matters.
The information contained within this article is for guidance only and does not constitute financial advice.
Content correct at time of writing.