First Time Buyer Stamp Duty

Stamp duty land tax (SDLT) is a tax you pay when purchasing property or land in England and Northern Ireland. The amount depends on the purchase price and whether you qualify for any relief. Scotland and Wales have their own equivalents: Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT) respectively.

First time buyer stamp duty relief was introduced in November 2017 to help people get on the property ladder. It means you pay a reduced rate, or nothing at all, compared to standard stamp duty rates. The relief is designed to lower the upfront costs of buying your first home, which can make a real difference when you are already stretching to cover a deposit and other purchase costs.

Between September 2022 and March 2025, temporary higher thresholds applied. The nil-rate band was raised to £425,000 and the purchase price cap to £625,000. These reverted to £300,000 and £500,000 on 1 April 2025.

If you are buying with another first time buyer, you can both benefit from the relief. However, if either of you has previously owned property, the relief will not apply to the purchase. It is worth understanding these rules early so you can plan your first time buyer mortgage budget accurately.

First time buyer stamp duty rates from April 2025 onwards are straightforward. If your property costs £300,000 or less, you pay no stamp duty at all. If it costs between £300,001 and £500,000, you pay 5% only on the amount above £300,000.

If the property price exceeds £500,000, you lose first time buyer relief entirely and pay standard rates on the full price. This is not a gradual increase: the relief disappears completely once you cross the £500,000 threshold.

For comparison, standard stamp duty rates for non-first time buyers are higher. The nil-rate band is only £125,000, with 2% charged between £125,001 and £250,000, and 5% between £250,001 and £925,000. This means first time buyer relief can save you up to £8,750 on a £500,000 property compared to standard rates.

Calculating first time buyer stamp duty is simpler than working out standard rates because there are only two bands. If your property costs £300,000 or less, the calculation is easy: you pay nothing. For properties between £300,001 and £500,000, you only pay 5% on the portion above £300,000.

Here are three worked examples to show how the sums work:

• £250,000 property: Falls within the nil-rate band. Stamp duty = £0.
• £400,000 property: First £300,000 at 0% = £0. Remaining £100,000 at 5% = £5,000. Total stamp duty = £5,000.
• £500,000 property: First £300,000 at 0% = £0. Remaining £200,000 at 5% = £10,000. Total stamp duty = £10,000.

If the property costs £500,001 or more, you do not get any first time buyer relief. You would pay standard rates instead, starting from the first pound. On a £510,000 property, your stamp duty bill under standard rates would be £15,500, compared to the £10,000 you would have paid at £500,000 with relief. This cliff edge means it is worth considering whether negotiating the price below £500,000 could save you money overall.

Your solicitor or conveyancer normally handles the stamp duty calculation and payment as part of the mortgage application process. However, it is useful to run the numbers yourself early on so you can factor stamp duty into your total buying costs alongside borrowing limits and fees.

To qualify for first time buyer stamp duty relief, you must meet specific criteria set by HMRC. The rules apply to the buyer, not the property, so it is your personal buying history that matters.

You qualify as a first time buyer if you:

• Have never owned a property before: This includes freehold or leasehold interests, anywhere in the world. Inherited property counts as ownership.
• Are purchasing a single dwelling: The property must be residential and intended as your main home. Buy-to-let purchases do not qualify.
• Are buying a property worth £500,000 or less: Properties above this threshold do not attract first time buyer relief at all.

If you are buying jointly, every buyer must be a first time buyer for the relief to apply. If one person has previously owned property and the other has not, neither person can claim the relief on that purchase. This is particularly important for couples where one partner is a joint mortgage applicant who has owned before.

The relief applies to purchases in England and Northern Ireland only. If you are buying in Scotland, Land and Buildings Transaction Tax has its own first time buyer relief with different thresholds. Wales removed its first time buyer relief for Land Transaction Tax in 2018.

You must pay stamp duty within 14 days of the completion date, which is the day the property legally becomes yours. Your solicitor or conveyancer typically handles this on your behalf as part of the conveyancing process, submitting the SDLT return and payment to HMRC.

Even if you qualify for first time buyer relief and owe nothing, your solicitor must still file an SDLT return to claim the relief. Failing to submit the return on time can result in penalties and interest charges from HMRC, even if no tax is due.

The stamp duty is usually paid from the funds you provide on completion day. Your solicitor will include it in the completion statement alongside other costs such as legal fees and any remaining balance owed. Make sure you have factored stamp duty into your total budget alongside your deposit and mortgage rate costs.

If you are using a government scheme such as shared ownership, the stamp duty rules can vary. With shared ownership, you can choose to pay stamp duty on the share you are purchasing or on the full market value. Paying on the share may be cheaper initially, but you will owe additional stamp duty when you staircase to a larger share.

A qualified mortgage advisor can help you understand exactly what you will owe and when, so there are no surprises on completion day.