Upcoming property tax changes: SDLT and furnished holiday lets

April 2025 brings significant property tax changes that will impact both residential property buyers and furnished holiday let (FHL) owners. The upcoming reduction in stamp duty land tax (SDLT) thresholds will see many homebuyers facing higher tax bills. Abolishing special tax rules for FHL properties will change profit and loss sharing for married couples and civil partners. Understanding these changes is crucial for property owners and buyers looking to navigate the evolving tax landscape efficiently.

What are the property tax changes?

SDLT residential thresholds increase from 1 April 2025

The amount of SDLT payable on residential property purchases will increase for many from 1 April 2025 when temporary thresholds are removed.

The temporary 0% threshold applying to the purchase of residential property will drop from £250,000 to £125,000 on 1 April 2025. This will lead to many purchasers paying £2,500 more SDLT.

The nil-rate threshold for first time buyers’ (FTB) relief will fall from £425,000 to £300,000 on 1 April 2025. At the same time, the maximum house price on which FTB relief can be claimed will drop from £625,000 to £500,000. A first time buyer purchasing a home for £500,000 will pay £3,750 if they complete by 31 March 2025. This will rise to £10,000 if they complete later.

Furnished holiday lets (FHL) – changing basis of taxation & impact for married couples 

From 6 April 2025 the special tax rules available to owners of FHL property will be abolished.

One of the changes that will impact spouses or civil partners is that they will no longer be able to share FHL profits or losses as they wish. Currently if FHL property is jointly owned the owners can choose to allocate the majority of profit to a lower or non-tax paying spouse.

From 6 April 2025, if married taxpayers want to be taxed on an uneven basis they will need to own the property in different proportions. This will require input from a solicitor. An election will also be required in many cases for this to be effective for tax purposes. There may also be a trust registration service requirement.

Where there is a mortgage on the property there is an assumption of a liability to the spouse obtaining the larger ownership share. This will be treated as consideration for SDLT purposes. SDLT advice should be sought to clarify whether there is a reporting or payment requirement. With rates increasing from 1 April 2025 there may be advantages to dealing with this promptly.

Married couples jointly owning any property should consider changes in their personal circumstances. This could lead to more tax-efficient arrangements.

If you have any queries on any of these property tax changes, please get in touch. If you have a query on purchasing a property, do not hesitate to contact a member of the SDLT team.