A Guide to First Time Buyer Stamp Duty

Stamp duty was introduced 1694 when it was intended to raise funds for the war by taxing goods such as newspapers and medicines. The success of the tax makes it still a constant in our lives today, yet it is now only a requirement when purchasing properties. Since its inception, the stamp duty tax has changed to include different band thresholds for properties which require different costs. Within our guide, we’ll take a look at what the tax means for first-time buyers.

What is stamp duty?

Stamp duty, also known as stamp duty land tax (SDLT) in the UK, is a tax imposed on the purchase of land and property. Until 1997, the payable rate was 1% on properties over £60,000, but stamp duty rates have since increased with the highest rate now being 12%. Under the current standard residential rates, Stamp Duty Land Tax begins to apply above £125,000, although different thresholds and reliefs may apply depending on the buyer’s circumstances.

Stamp duty for first time buyers

Many countries offer stamp duty relief or exemptions to first-time buyers to make it more affordable for them to get on the property ladder. In the UK, the threshold for when you have to start paying stamp duty is higher for first-time buyers, meaning you have to spend more on a property to have to pay the tax.

How much is stamp duty for first-time buyers?

The current Stamp Duty Land Tax rates for qualifying first-time buyers in England and Northern Ireland are:

First-time buyers purchasing a property for £300,000 or less pay no Stamp Duty Land Tax. For a property costing between £300,001 and £500,000, 5% is payable on the portion above £300,000. For example, on a £400,000 property, the Stamp Duty Land Tax would be £5,000.

If the property costs more than £500,000, first-time buyer relief does not apply and the standard residential rates apply to the full purchase price.

Who qualifies as a first-time buyer?

To benefit from first-time buyer stamp duty relief, you typically need to meet certain criteria, such as:

• You’ve never owned a residential property or land before.
• The property’s purchase price falls within a specific threshold.
• The property will be your main residence.

This means that if you have previously inherited a property or are intending to use the house as a buy-to-let, you won’t be eligible. If there are two people purchasing the property, both buyers must individually qualify as first-time buyers to be eligible for the relief.

When do you pay stamp duty?

Stamp duty is typically a one-time payment paid at the time of property purchase, where you’ll have 14 days from the date of completion to file a return. Usually, this process will be dealt with by your solicitor, who will often pay for you and then add the amount to your bill. 

Don’t miss out on first-time buyer stamp duty

If you’re a first-time buyer, it is important to know where your money is going when purchasing your home. We hope our blog on stamp duty has provided you with all of the information you need to know how much money you will spend on stamp duty. 

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