What do I need to know about the new Stamp Duty changes in Northern Ireland?
From April, Stamp Duty rules are changing in England and Northern Ireland, potentially raising costs for first-time buyers, home movers and property investors.
However, it’s important not to panic. Here, Ian Creighton, Partner at Wilson Nesbitt, explains what Stamp Duty is and how the new changes could affect you.
What is Stamp Duty when buying a property?
Stamp Duty is a type of tax that’s charged when you buy a property or land over a certain price.
If you’re the buyer of the property, you’ll be expected to pay it within 14 days of completing the purchase. Your solicitor will send this payment on your behalf and submit the appropriate form.
There are a large number of exemptions to stamp duty and in certain circumstances it can be very complex, but there are 3 main rates of stamp duty payable – First Time buyer rate, Standard rate, and the Higher rate, which are all discussed below.
What Are the New Changes Around Stamp Duty for First-Time Buyers?
Until April, first-time buyers are exempt from paying Stamp Duty on homes priced up to £425,000.
However, from 1st April, the threshold drops from £425,000 to £300,00. A 5% Stamp Duty rate will apply to properties priced between £300,001 and £500,000.
For example, if you’re a first-time buyer purchasing a home for £350,000, the Stamp Duty cost will be £2,500.
What Are the New Changes Around Stamp Duty for Non-first time buyers in Northern Ireland?
Anyone who is selling their current main residence to purchase a property that will become their new residence pays stamp duty at the ‘standard rate’. This rate also applies if you previously owned a property anywhere in the world but currently own no property at the time of your new purchase.
The rate of stamp duty is applied in bands, with the rate escalating as you move up the property price bands. Below are the ‘standard rate’ bands that will apply from 1st April 2025:
| Property or lease premium or transfer value | SDLT rate |
|---|---|
| Up to 125,000 | Zero |
| The next 125,000 (the portion from 125,001 to 250,000) | 2% |
| The next 675,000 (the portion from 250,001 to 925,000) | 5% |
| The next 575,000 (the portion from 925,001 to 1.5 million) | 10% |
| The remaining amount (the portion above 1.5 million) | 12% |
From April, properties priced between £125,000 and £250,000 will be taxed at a new 2% Stamp Duty rate. Homes priced between £250,001 and £925,000 will continue to be taxed at 5%.
This new threshold of £125,000 means that non-first-time buyers purchasing property above this price will face a new tax payment.
For example, if you are a non-first time buyer purchasing a property for £350,000, you will pay stamp duty of £7,500 and the breakdown of how that is calculated is shown below. This is £2,500 more that the £5,000 stamp duty that would be payable if the purchase completed prior to 1st April 2025.
| Purchase price bands (£) | Percentage rate (%) | SDLT due (£) |
|---|---|---|
| Up to 125,000 | 0 | 0 |
| Above 125,000 and up to 250,000 | 2 | 2,500 |
| Above 250,000 and up to 925,000 | 5 | 5,000 |
| Above 925,000 and up to 1,500,000 | 10 | 0 |
| Above 1,500,000+ | 12 | 0 |
| Total SDLT due | 7,500 |
How Will the New Stamp Duty Affect Me If I Own Multiple Properties?
If you own multiple properties and you are not replacing your main residence with your new purchase property, you are liable to pay stamp duty at the ‘higher rate’.
The current Stamp Duty payable by someone on the higher rate for a property valued between £0 and £250,000 is 5%. From 1st April 2025 this changes significantly, and the 5% rule will only apply to the first £125,000 of the property.
You will then be charged 7% on the next £125,000 and 10% on amounts over £250,000.
Below are the price bands that are applied for the higher rate of stamp duty:
| Property or lease premium or transfer value | SDLT rate |
|---|---|
| Up to 125,000 | 5% |
| The next 125,000 (the portion from 125,001 to 250,000) | 7% |
| The next 675,000 (the portion from 250,001 to 925,000) | 10% |
| The next 575,000 (the portion from 925,001 to 1.5 million) | 15% |
| The remaining amount (the portion above 1.5 million) | 17% |
So for example, someone who is liable to pay Stamp Duty at the Higher rate who is purchasing a property for £350,000 will pay £25,000 in Stamp duty if it completes after 1st April 2025. The breakdown of this calculation is shown below. The amount prior to 1st April 2025 would have been £22,500.
| Purchase price bands (£) | Percentage rate (%) | SDLT due (£) |
|---|---|---|
| Up to 125,000 | 5 | 6,250 |
| Above 125,000 and up to 250,000 | 7 | 8,750 |
| Above 250,000 and up to 925,000 | 10 | 10,000 |
| Above 925,000 and up to 1,500,000 | 15 | 0 |
| Above 1,500,000+ | 17 | 0 |
| Total SDLT due | 25,000 | |
At a Glance
Below is a table showing the changes to the three main rates of Stamp duty applied to a purchase of a property at £350,000:
| Rate of Stamp Duty | Tax payable before 1st April | Tax payable after 1st April |
| First Time Buyer | £0 | £2,500 |
| Standard Rate | £5,000 | £7,500 |
| Higher Rate | £22,500 | £25,000 |
Should I Be Concerned About These New Stamp Duty Changes?
While the new rules introduce additional costs, they shouldn’t deter potential buyers. The property market remains strong, and mortgage rates are stabilising.
It’s also important to note that the average house price in Northern Ireland is £219,110. Meaning that for most people, particularly first time buyers, the Stamp Duty changes will either not apply or be minimal.
For property investors, Stamp Duty costs will increase, but with careful planning and consideration, we expect to see landlords continue to invest in the Buy to Let market.
The bottom line is the changes are manageable with proper planning.
If you’re considering buying or investing in property, get in touch with our team today. We can help you navigate Stamp Duty costs along with the rest of your house buying journey.
FAQs
Who has to pay Stamp Duty in Northern Ireland?
Anyone purchasing a property in line with the Stamp Duty requirements, apart from first time buyers for properties over £300,000
How do I calculate how much Stamp Duty I need to pay?
It depends on the price of the property and whether you are a first time buyer or own more than one property. You can use the HMRC Stamp Duty calculator for an estimate.
Can I add Stamp Duty to my mortgage?
Some lenders will allow you to include Stamp Duty in your mortgage, but this will increase the total amount you borrow and the interest you pay.
Are there any exemptions to Stamp Duty?
First time buyers purchasing a property below £300,000 are exempt. Some transactions, such as property transfers due to divorce or inheritance, may also be exempt depending on the circumstances, and in particularly complex scenarios you should take advice from a tax specialist.
Do I have to pay Stamp Duty if I am transferring ownership of a property?
It depends on the circumstances and the value of the property. If the property is a gift or inheritance, Stamp Duty may not apply. However, in transactions involving a mortgage or purchase price, tax could be due.
What happens if I don’t pay Stamp Duty on time?
You must pay Stamp Duty within 14 days of completing your property purchase. Late payments may result in penalties and interest charges from HMRC.
Does Stamp Duty apply to commercial properties or land?
Yes, Stamp Duty Land Tax (SDLT) applies to commercial properties and land purchases above certain thresholds, but the rates differ from residential property transactions.