Do first-time buyers pay Stamp Duty, and how much is it?

What is Stamp Duty?

Stamp Duty Land Tax (SDLT or Stamp Duty for short) is a tax paid to the government when you buy property or land in England, and Northern Ireland - Wales and Scotland have similar property taxes that have slightly different names. The Stamp Duty tax is broken down into bands, and each band triggers a different rate of tax. The more expensive the property’s price tag, the bigger the tax bill.

Do first-time buyers pay Stamp Duty?

Yes, first-time buyers pay Stamp Duty, but only on properties that cost above £300,000. If you are purchasing a property that’s £300,000 or less, as a first-time buyer, you won’t pay any Stamp Duty.

If you’ve been a homeowner before but you sold the property to rent or live with family, you won’t qualify as a first-time buyer. This means that if you purchase a home, you'll pay Stamp Duty on any portion of the property's value over £125,000.  

How much is Stamp Duty for first-time buyers?

Whether or not you’ll pay Stamp Duty as a first-time buyer and the exact amount payable will depend on the price of the property you’re buying. In England and Northern Ireland, if a property is £300,000 or less, you won’t pay any Stamp Duty as a first-time buyer.

If you are purchasing a property worth more than £300,000, you’ll pay no Stamp Duty on the first £300,000 of the property value, but 5% on anything between £300,0001 and up to £500,000. If you’re buying a property worth more than £500,000, you won’t get any first-time buyer relief, which means you'll pay standard Stamp Duty rates.

Examples:

If you're a first-time buyer purchasing a £250,000 house, you would pay no Stamp Duty.

If you were purchasing a £400,000 house, you'd pay 0% on the first £300,000, then 5% on the remaining £100,000. So your total Stamp Duty bill would be £5,000.

If you were purchasing a £550,000 house, you would not be able to claim first-time buyer stamp duty relief. This means you'll have to pay the same Stamp Duty as second-time buyers, which works out as 0% on the first £125,000, 2% on the next £125,000 (£2,500) and 5% on the remaining £300,000 (£15,000). So in total your Stamp Duty bill would come to £17,500.

How is Stamp Duty different in Wales?

In Wales, Stamp Duty is known as Land and Buildings Transaction Tax, and the first £225,000 of a property’s value is tax-free. After this, you will pay 5% on any share of the property over £225,000 and below £400,000. For any portion above £400,000, you will pay 7.5%, up to the value of £750,000. Find out more in our dedicated guide on Stamp Duty in Wales.

You can still use our Stamp Duty Calculator to see what you'll pay on a first house purchase in Wales.

How is Stamp Duty different in Scotland?

Like Wales, Scotland has a Land and Buildings Transaction Tax instead of Stamp Duty, but the first-time buyer threshold is less generous than the Welsh version. In Scotland, there’s no tax payable on the first £175,000 of the property for first-time buyers. After this, you'll pay 2% on the property value between £175,001 and £250,000, 5% on the property value between £250,001 and £325,000, 10% on the property value between £325,001 and £750,000, then 12% on £750,001 or more. Find out more in our guide on Stamp Duty in Scotland.

If you want to see what you'll pay for your first home in Scotland, you can also use our Stamp Duty Calculator.

What happens if I’m a first-time buyer buying with a homeowner?

If you are buying a home with someone who's already bought a home, you won’t qualify for first-time buyer Stamp Duty relief. In order to qualify for first-time buyer Stamp Duty relief, you both need to have never owned a property or been on property deeds before. 

If you’re buying as a couple but are not married or in a civil partnership, you could buy the property solely in the first-time buyer’s name to qualify for the relief, but then your mortgage application will be based on one person’s salary, which could mean you can’t borrow as much.

When do you pay Stamp Duty?

If you’re buying a home in England or Northern Ireland, you’ll pay Stamp Duty within 14 days of completion. This is when all the contracts are signed, and you get the keys to your new home. If you’re using a solicitor, they’ll normally do any Stamp Duty-related admin for you and let you know when the payment needs to be made. However, many solicitors will want you to send them the money before the property purchase is complete to make this smoother.

Although solicitors will usually sort Stamp Duty out for you, it’s legally your responsibility to ensure it’s paid. Failure to pay on time could result in a fine and interest.

Can I get first-time buyer Stamp Duty relief if I’m using a guarantor mortgage?

Yes, if you’re buying as a first-time buyer using a guarantor mortgage, you’ll still be eligible for first-time buyer relief as long as your guarantor is only named on the mortgage, rather than the property.

To learn more about buying a house with help from family, take a look at our guarantor mortgages guide.

Can I get first-time buyer Stamp Duty relief if buying a shared ownership property?

Yes, if you’re buying as a first-time buyer using shared ownership, you are eligible for first-time buyer stamp duty relief as long as you are buying through an approved shared ownership scheme.

Can I use my Lifetime ISA bonus to pay my Stamp Duty?

No, you cannot use your Lifetime ISA bonus to pay your stamp duty bill. Your LISA bonus must be used as part of the funds consolidated at the completion of the property transaction.

To learn more about the process of buying your first home, take a look at our buying a house timeline. This’ll walk you through the various steps involved so you have an idea of what to expect.

If you’re feeling overwhelmed and have no idea where to start, talk to Tembo. We’ve helped thousands of first-time buyers overcome common mortgage affordability obstacles such as a small deposit or modest salary. So if you’re worried your application will be rejected, our award-winning team can help. Get started here.