Do First-Time Buyers Pay Stamp Duty?

Stamp Duty Land Tax (SDLT) applies to property purchases in England and Northern Ireland. While the general rules can be complex, specific regulations and reliefs exist for first-time homebuyers. This guide outlines how SDLT applies to first-time buyers, detailing eligibility criteria and the steps for calculating and paying the tax.

Defining First-Time Buyers and Stamp Duty Land Tax

HM Revenue & Customs (HMRC) defines a “first-time buyer” as an individual who has never previously owned a freehold or leasehold interest in a residential property. This applies regardless of whether the property was in the United Kingdom or elsewhere. Even if a property was inherited or received as a gift, prior ownership disqualifies an individual from first-time buyer status.

When multiple individuals purchase a property together, each buyer must individually meet this definition. If one joint purchaser has previously owned residential property, neither party qualifies for first-time buyer relief for that purchase. SDLT is levied on the purchase of land or residential property in England and Northern Ireland, with the tax amount dependent on the purchase price. Scotland and Wales have different land transaction tax systems.

First-Time Buyer Relief: Thresholds and Conditions

First-time buyers in England and Northern Ireland may qualify for SDLT relief, which can reduce the tax burden. As of April 1, 2025, first-time buyers pay no SDLT on the initial £300,000 of the property’s purchase price. This exemption provides savings for homes within this value range.

For properties valued between £300,001 and £500,000, a reduced SDLT rate of 5% applies only to the portion of the price within this band. For example, if a property costs £400,000, the 5% rate applies to the £100,000 exceeding the £300,000 threshold. If the purchase price exceeds £500,000, first-time buyer relief is not available, and standard SDLT rates apply to the entire purchase price.

Beyond meeting the first-time buyer definition, several other conditions must be met to claim this relief. The property must be intended as the buyer’s main residence, not for buy-to-let investments or second homes. The transaction must involve the purchase of a single dwelling. The acquisition must also be a genuine purchase with monetary consideration.

Calculating and Paying Stamp Duty Land Tax

Calculating Stamp Duty Land Tax involves applying the relevant rates to the bands of the property’s purchase price. For first-time buyers, this calculation considers the relief thresholds before applying any percentage rates. For example, a first-time buyer purchasing a property for £290,000 would pay £0 in SDLT, as this falls entirely within the £300,000 exempt threshold.

If a first-time buyer acquires a property for £450,000, they would pay 0% on the first £300,000 and 5% on the remaining £150,000 (£450,000 – £300,000), resulting in an SDLT payment of £7,500. Property solicitors or conveyancers typically handle these calculations as an integral part of the conveyancing process, ensuring accuracy and compliance.

The procedural aspect of paying SDLT requires submitting an SDLT return to HMRC and ensuring the tax is paid within 14 days of the property’s completion date. This 14-day deadline is strict, and failure to meet it can result in penalties and interest charges. In most property transactions, the buyer’s solicitor or conveyancer manages both the filing of the SDLT return and the payment of the tax on behalf of their client. Even if no SDLT is due because the property value falls within the exempt threshold, an SDLT return may still need to be filed to formally claim the first-time buyer relief.