When you’re preparing to buy your first home in the UK, navigating the various costs and taxes can feel overwhelming. One of the most common questions asked by first-time buyers is, “Do first-time buyers pay stamp duty?” This guide will break down the current rules, rates, and potential savings to give you a clear understanding of stamp duty and how it applies to first-time buyers in 2024.
What is stamp duty?
Stamp Duty Land Tax (SDLT), commonly known as stamp duty, is a tax you pay when you purchase a property or land over a certain price in England and Northern Ireland. Scotland and Wales have their own equivalent taxes – the Land and Buildings Transaction Tax (LBTT) in Scotland and Land Transaction Tax (LTT) in Wales – with slightly different rates and exemptions.
For first-time buyers, understanding the stamp duty rules is crucial as it can significantly impact the upfront costs of purchasing a property.
Do first-time buyers pay stamp duty?
The short answer is yes—but with significant exemptions and reliefs available. The UK government has implemented a stamp duty relief specifically for first-time buyers to help them get onto the property ladder.
Here’s how it works:
For properties up to £425,000: First-time buyers pay no stamp duty at all. This exemption covers a substantial portion of the property market, especially for homes outside of London and the South East.
For properties between £425,001 and £625,000: First-time buyers will pay stamp duty on the amount above £425,000 at a rate of 5%. This tiered approach means that first-time buyers can save significantly compared to other buyers who are subject to standard rates.
For properties above £625,000: If you are a first-time buyer purchasing a property above £625,000, you won’t qualify for any stamp duty relief and will need to pay the standard rates applicable to all buyers. In this case, the purchase is treated the same as for any non-first-time buyer.
Stamp duty rates for first-time buyers
To give a clearer picture of what these rates mean, here’s a quick breakdown of the stamp duty rates for first-time buyers:
Rates up to 31 March 2025
| Property Price | Stamp Duty Rate for First-Time Buyers |
| Up to £425,000 | 0% |
| £425,001 – £625,000 | 5% (on the portion above £425,000) |
| Above £625,000 | Standard stamp duty rates apply |
This relief has been a key part of the UK government’s strategy to support first-time buyers, allowing many to save thousands of pounds when purchasing their first home.
Example Calculations for First-Time Buyers
- Buying a home for £400,000: As a first-time buyer, you’ll pay no stamp duty, saving you around £10,000 compared to a non-first-time buyer.
- Buying a home for £500,000: You’ll pay stamp duty on the portion above £425,000. So, that’s £75,000 taxed at 5%, which totals £3,750.
- Buying a home for £650,000: Unfortunately, in this case, you won’t qualify for any first-time buyer relief and will pay the standard stamp duty rates for this price range.
Rates from 1 April 2025
| Property or lease premium or transfer value | SDLT rate |
|---|---|
| Up to £300,000 | Zero |
| £300,001 to £500,000 | 5% |
| If the price is over £500,000, | you cannot claim the relief. |
Example calculations first-time buyers:
Suppose in April 2025, you buy a house for £310,000. The SDLT you owe would be calculated as follows:
- 0% on the first £125,000 = £0
- 2% on the next £125,000 = £2,500
- 5% on the remaining £60,000 = £3,000
Total SDLT = £5,500
In this example, buying a property valued at £310,000 would result in an SDLT of £5,500 under the updated rates. This structure reflects the return to the £125,000 threshold and the new SDLT rates announced in the Autumn Budget 2024, effective March 2025.
Who qualifies as a first-time buyer?
To qualify for first-time buyer stamp duty relief, you must meet specific criteria:
- First Property: You must be purchasing your first-ever residential property. This includes homes abroad; if you’ve owned property overseas, you won’t qualify for relief.
- Sole Ownership: If you’re buying with a partner or friend, they also need to be first-time buyers for you both to qualify for relief.
- Primary Residence: The property you’re purchasing must be intended as your primary residence. This means buy-to-let properties are not eligible for first-time buyer relief.
How to claim first-time buyer stamp duty relief
Claiming stamp duty relief as a first-time buyer is straightforward. During the property transaction process, your solicitor or conveyancer will handle the stamp duty return and ensure that any relief is applied. They will ask you to confirm your status as a first-time buyer and adjust the stamp duty payable accordingly.
Changes to stamp duty relief in recent years
Stamp duty relief for first-time buyers was first introduced in 2017, aimed at making homeownership more accessible. Over time, adjustments have been made to keep pace with the property market. The latest significant change was the threshold increase to £425,000, which expanded the relief’s reach to more prospective buyers.
However, stamp duty rules are subject to change, as they often depend on government policies and housing market conditions. So it’s wise to check for any updates before you buy.
Additional tips for first-time buyers
Consider Mortgage Deals for First-Time Buyers: Many lenders offer tailored mortgage products that work well with first-time buyer incentives.
Budget Beyond Stamp Duty: Remember that stamp duty is just one cost; consider conveyancing fees, moving costs, and initial repairs or furnishing.
Look into Other First-Time Buyer Schemes: The government offers several initiatives, such as Help to Buy ISAs, Lifetime ISAs, and shared ownership schemes, which can complement stamp duty relief and make homeownership more affordable.
In closing
Up to 31 March 2025, first-time buyers in the UK have an excellent opportunity to save on stamp duty, making it easier to get onto the property ladder. By understanding the stamp duty exemptions and ensuring eligibility, you can avoid unnecessary expenses and make the most of the financial incentives available.
If you’re considering buying your first home, consult with a mortgage advisor or property expert to ensure you’re fully prepared for the costs involved. And remember, even with the relief, thorough budgeting is essential to make your first home purchase a smooth and affordable experience.
FAQs
What is the current stamp duty threshold for first-time buyers?
The stamp duty threshold for first-time buyers is £425,000. First-time buyers pay no stamp duty on homes up to this price. For homes priced between £425,001 and £625,000, they pay 5% on the amount above £425,000.
Who qualifies as a first-time buyer for stamp duty relief?
To qualify as a first-time buyer, you must be purchasing your first-ever residential property and intend to live in it as your primary residence. If buying with others, each person must also be a first-time buyer for the relief to apply.
How much stamp duty will I pay as a first-time buyer on a £500,000 property?
On a £500,000 property, first-time buyers pay stamp duty only on the portion above £425,000. This results in 5% of £75,000 (the difference), which totals £3,750.
Can I qualify for first-time buyer stamp duty relief if I’ve inherited a property?
No, you would not qualify as a first-time buyer if you’ve previously inherited property, as this would mean you have owned residential property before. The relief only applies to those purchasing their first home.
Does stamp duty apply to buy-to-let properties for first-time buyers?
No, stamp duty relief for first-time buyers is only available for primary residences. If you are buying a property to let out, you would not qualify for first-time buyer relief and would need to pay the standard stamp duty rates.
Do first-time buyers pay stamp duty in Wales and Scotland?
Wales and Scotland have different property taxes. In Wales, first-time buyers may be eligible for Land Transaction Tax (LTT) relief, while in Scotland, they may benefit from Land and Buildings Transaction Tax (LBTT) relief. However, the thresholds and rules differ slightly from those in England and Northern Ireland.
What happens if I’m a first-time buyer and the property costs more than £625,000?
If the property price exceeds £625,000, first-time buyer relief does not apply, and you will need to pay standard stamp duty rates for the entire purchase price.
Can I claim stamp duty relief as a first-time buyer if my partner has owned a property before?
No, if you are buying jointly with someone who has previously owned a property, you won’t qualify for first-time buyer relief. Both individuals must be first-time buyers to be eligible for the relief.
How do I claim first-time buyer stamp duty relief?
When purchasing the property, your solicitor or conveyancer will usually handle the stamp duty return on your behalf, ensuring that the first-time buyer relief is applied if you’re eligible. They will confirm your first-time buyer status and adjust the stamp duty accordingly.
Is stamp duty relief for first-time buyers likely to change in the future?
Stamp duty rules, including first-time buyer relief, are often subject to changes by the government. While there is no certainty of future changes, it’s a good idea to stay informed about any updates or potential budget announcements that could affect stamp duty.
Are there other government schemes available for first-time buyers?
Yes, in addition to stamp duty relief, the UK government offers other schemes such as Lifetime ISAs, and shared ownership options that can assist first-time buyers in purchasing a property.
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