UK homebuyers who miss tax deadline to pay up to £11,250 extra

(Bloomberg) — Tens of thousands of Britons currently in the process of purchasing a home are on course to miss a key tax deadline, with some first-time buyers facing up to £11,250 ($14,226) in extra charges, according to a new report.

Property website Rightmove said almost 74,000 homemovers hoping to complete transactions by March 31 will see the process stretch into April when the thresholds for paying stamp duty become less generous.

That includes almost 26,000 first-time buyers. Those paying £500,000 to £625,000 — an average price in London — will be hit hardest by the delay with £11,250 in additional tax, Rightmove said.

“There will be a lot of first-time buyers disheartened by the fact that they will have to pay, in some cases, thousands of extra pounds to complete their house purchase from April especially as many of the delays experienced will have been out of the buyers’ control due to issues presented in the property chain,” said Nathan Emerson, chief executive officer of Propertymark.

Failing to complete in time will come as a further blow to households already struggling to afford a home and now facing a renewed bout of inflation. Stamp duty thresholds were raised by the previous Conservative government in 2022 but Labour has confirmed that the relief will end on March 31 as planned, as Chancellor Rachel Reeves seeks every pound of tax revenue she can get to repair the public finances.

Prime Minister Keir Starmer has promised instead to make it easier to get onto the property ladder by building 1.5 million homes over five years.

Homebuyers in England currently pay no stamp duty on the first £250,000 of a purchase. From April 1, that threshold will fall to £125,000. For first-time buyers, it will drop from £425,000 to £300,000. Rightmove said it is calling on the government to extend the deadline.

Real estate agents are warning about logjams across the UK as Britons scramble to complete transactions. The lengthy homebuying process, which takes an average of five months due to document exchanges and property checks, is exacerbating the issue.

Most of those who miss the deadline will have to shoulder an additional £2,500 in levies, with the total amounting to £142 million in extra stamp duty payments, Rightmove said. First-time buyers account for £34 million of that sum.

Among English regions, buyers in the South East will be most affected. While the region is home to the second-most expensive properties in the country, it also has the highest number of households expected to complete purchases just after the stamp duty break expires.

“We expect a rush to complete close to March 31st as first-time buyers and home-movers try to avoid paying extra in tax,” Rightmove’s property market expert Colleen Babcock said. “There is a relatively small, but disproportionately impacted group of first-time buyers who will be caught out by the changing thresholds, highlighting some disparities in the way the current system works.”

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