Stamp Duty for First Time Buyers

First Time Buyer Stamp Duty Rates 2025

If you're a first time buyer in England or Northern Ireland, you benefit from reduced stamp duty rates:

Stamp Duty Examples for First Time Buyers

Who Qualifies as a First Time Buyer?

To claim first time buyer stamp duty relief, you must meet ALL of these criteria:

• Never owned a property or land anywhere in the world (including overseas)
• Buying a property to use as your main residence (not buy-to-let)
• The property costs £625,000 or less
• All buyers on the purchase must be first time buyers
• Not received property as a gift or inheritance (this disqualifies you)

• Previously owned any property, even if sold
• Inherited a property (even if you sold it)
• Buying with someone who has owned property before
• Buying a property over £625,000
• Buying a buy-to-let investment property

First Time Buyer Stamp Duty Timeline

How to Claim First Time Buyer Relief

Claiming first time buyer stamp duty relief is a straightforward process, but you must ensure the claim is made correctly to avoid paying unnecessary tax.

Step-by-Step Claiming Process

• Step 1: Inform your solicitor or conveyancer that you are a first time buyer at the earliest opportunity, ideally when you instruct them
• Step 2: Your solicitor will include the first time buyer relief claim on the SDLT return (Form SDLT1) that they submit to HMRC on your behalf
• Step 3: The SDLT return must be filed with HMRC within 14 days of the completion date (not the exchange date)
• Step 4: HMRC will process the return and issue an SDLT5 certificate, which is needed by the Land Registry to register the property in your name

You do not need to apply to HMRC yourself or fill in any separate forms. The relief is applied automatically through the conveyancing process. However, if you complete a purchase without claiming the relief, you can apply for a refund within 12 months of the filing date, or within 12 months of the date the overpayment was discovered.

HMRC Definition: What Counts as a "First-Time Buyer"

HMRC applies a strict definition of "first-time buyer" for stamp duty purposes. Understanding exactly who qualifies -- and who does not -- is essential before relying on the relief.

You ARE a First-Time Buyer If:

• You have never owned a freehold or leasehold interest in residential property anywhere in the world
• You are purchasing a property that you intend to use as your main residence
• The purchase price is within the qualifying threshold (currently £500,000)

You Are NOT a First-Time Buyer If:

• You have previously owned a property, even if you sold it years ago
• You inherited a property (or a share of one), even if it was sold before your current purchase
• You received a property as a gift
• You owned property overseas at any point in your life
• You were named on the title deeds of a previous property, even if you did not pay towards it

Joint Purchases with Non-First-Time Buyers

One of the most common issues with first time buyer relief arises in joint purchases. The rules are clear but can catch couples and friends unaware.

All buyers on the transaction must be first-time buyers. If even one person on the purchase has previously owned property, the entire transaction is disqualified from first time buyer relief, and standard SDLT rates apply to the full purchase price.

Common Scenarios

If you are buying with a partner who is not a first-time buyer, consider whether the purchase could be structured with only the first-time buyer on the title deeds. However, this has implications for mortgage applications and ownership rights. Always seek independent legal advice before structuring a purchase in this way.

Stamp Duty on Shared Ownership and New Builds

Shared Ownership Properties

First-time buyers purchasing through shared ownership schemes have two options for paying SDLT:

• Market value election: Pay SDLT on the full market value of the property in one go. First time buyer relief applies based on the full market value. This means no further SDLT is due when you staircase (buy further shares).
• Pay in stages: Pay SDLT only on the share you are purchasing. No SDLT is due on the rent portion. However, when you staircase above 80%, SDLT becomes due on the remaining share at standard rates. First time buyer relief applies to the initial share purchase if the market value is within the threshold.

For most first-time buyers purchasing smaller shares, the "pay in stages" option results in lower initial costs, particularly for higher-value properties.

New Build Properties

First time buyer relief applies equally to new build properties as it does to existing homes. The SDLT is calculated on the purchase price in the same way. Some key points for new builds:

• The purchase price includes any fixtures, fittings, or upgrades selected as part of the new build specification
• Incentives from builders (such as cashback or paid stamp duty) do not reduce the purchase price for SDLT purposes -- you pay based on the headline price
• If the builder offers to "pay your stamp duty," this is effectively a discount in another form, but HMRC still bases SDLT on the contract price

Scotland LBTT: First-Time Buyer Relief Comparison

Scotland operates its own property tax system called Land and Buildings Transaction Tax (LBTT), administered by Revenue Scotland. First-time buyer relief in Scotland differs from England and Northern Ireland.

Wales has its own system called Land Transaction Tax (LTT), administered by the Welsh Revenue Authority. As of 2025/26, Wales does not offer a specific first-time buyer relief. LTT applies at standard rates regardless of buyer status, with the nil-rate band at £225,000 for all buyers.

Understanding How First Time Buyer Stamp Duty Is Calculated

First time buyer SDLT relief works on a progressive (slice) basis, meaning different portions of the purchase price are taxed at different rates. It is not a flat rate applied to the entire purchase price.

Current Rates from April 2025

Detailed Worked Examples Under Current (Post-April 2025) Thresholds

Stamp Duty Considerations for Different Property Types

Leasehold Properties

First time buyer relief applies to leasehold properties (flats and apartments) in the same way as freehold houses. SDLT is based on the purchase price of the lease. If the lease has an annual ground rent above £250, additional SDLT may be calculated on the net present value of the rent, but for most residential purchases this results in zero additional tax. Service charges and management fees do not form part of the SDLT calculation.

Off-Plan Purchases

If you are purchasing a new build property off-plan (before it is built), the completion date for SDLT purposes is when the property is substantially complete and you take legal possession. You may exchange contracts many months before completion. The SDLT rates and thresholds in force at the completion date determine the amount of tax payable, not the rates at exchange.

Properties with Land

If you are purchasing a property with additional land (for example, a house with adjacent paddock land), SDLT is calculated on the entire purchase price. However, if the additional land is purchased separately from the dwelling, different considerations may apply. Always disclose additional land purchases to your solicitor to ensure correct SDLT treatment.

Help to Buy Legacy and Other Support Schemes

The Help to Buy equity loan scheme closed to new applications on 31 October 2022, with completions ending on 31 March 2023. However, several government schemes remain available to support first-time buyers:

Currently Available Schemes

• Lifetime ISA: Save up to £4,000 per year and receive a 25% government bonus (up to £1,000/year). Can be used towards a first home costing up to £450,000. Must be opened before age 40.
• Shared Ownership: Buy a share (25%-75%) of a property and pay rent on the remainder. Available through housing associations. Allows you to staircase to full ownership over time.
• First Homes: A government scheme offering new-build homes to first-time buyers at a discount of at least 30% below market value. The discount is locked in for future sales.
• Right to Buy / Right to Acquire: Council tenants can buy their rented home at a discount. Discounts vary by region and length of tenancy.
• Mortgage Guarantee Scheme: The government guarantees a portion of high loan-to-value (95%) mortgages, making it easier for buyers with smaller deposits to secure a mortgage.

Frequently Asked Questions

Can I claim first time buyer relief if buying with a partner?

Both buyers must be first time buyers. If your partner has previously owned a property, you cannot claim the relief, even if you haven't owned before. The relief is assessed based on all buyers named on the transaction, not just the primary applicant.

Does owning a property abroad disqualify me?

Yes. If you've ever owned a property anywhere in the world, including overseas, you cannot claim first time buyer stamp duty relief in England or Northern Ireland. HMRC's definition of "first-time buyer" requires that you have never owned a freehold or leasehold interest in a dwelling anywhere globally.

What if I inherited a share of a property?

Inheriting any property interest, even a small share, typically disqualifies you from first time buyer relief. However, if you inherited a very small share (for example, as one of many beneficiaries) and never lived in the property, there may be exceptions in limited circumstances. You should check with HMRC or consult a solicitor before assuming you are disqualified.

What stamp duty do first-time buyers pay from April 2025?

From 1 April 2025, the first time buyer nil-rate threshold reduced from £425,000 to £300,000, and the maximum property value qualifying for relief dropped from £625,000 to £500,000. This means first time buyers now pay 0% on the first £300,000 and 5% on the portion between £300,001 and £500,000. Properties above £500,000 do not qualify for any first time buyer relief.

Can I claim stamp duty relief on a buy-to-let property?

No. First time buyer relief only applies to properties that will be used as your main residence. Investment properties, buy-to-let purchases, and second homes do not qualify. Additionally, buy-to-let and second home purchases attract a 5% surcharge on top of standard SDLT rates.

Do I pay stamp duty if the property is exactly £300,000?

No. From April 2025, first time buyers pay £0 stamp duty on properties priced at exactly £300,000 or below. This represents the maximum saving compared to standard rates.

How do I claim the relief?

Your solicitor or conveyancer will apply the relief when submitting your SDLT return to HMRC. You do not need to complete any separate application. Simply ensure your solicitor is aware that you are a first time buyer so they can include the claim on the SDLT1 form submitted within 14 days of completion.

What if I have already exchanged but not completed before the April 2025 changes?

SDLT is charged based on the completion date, not the exchange date. If you exchanged contracts before 1 April 2025 but completed on or after that date, the new lower thresholds apply. Transitional relief was available in limited circumstances for contracts exchanged before 26 October 2024 -- check with your solicitor for details.

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