Do You Pay Stamp Duty As A First Time Buyer?
- Adrian Collins
- May 22, 2023
- 5 min read
Updated: Mar 20
Yes, depending on the value of the property you plan to purchase, you may be required to pay stamp duty. To help you navigate this process, we’ve compiled everything you need to know in one place.
Explore our guide to understand what stamp duty is, when it applies, and the steps you need to take to fulfill your legal obligations. Keep reading to stay informed and prepared!
What Is Stamp Duty Land Tax?
Stamp Duty Land Tax (SDLT) is a specific tax you need to pay when purchasing property or land in either England or Northern Ireland. While the specifics of stamp duty have changed over time, the essentials remain the same, from stamp duty holidays to changes in tiers.
When you purchase your home, and it is worth over a certain amount, you’ll be required to pay a standardised amount of money to HMRC as tax. The rules and requirements of stamp duty are slightly different for a first–time buyer, but we’ll cover that in further detail below.
In Scotland and Wales, different taxes apply for the same process. In Scotland, this is called the Land and Buildings Transaction Tax (LBTT), while in Wales, this is known as the Wales Land Transaction Tax (LTT).
Stamp Duty Guide For First-time Buyers
What Is A First-time Buyer?
A first-time buyer is classified as anyone who has not purchased a property before and is buying one for the first time. This means you can’t have owned property in the UK or overseas, you can’t have inherited property, and the property you are purchasing will be your sole residence. You cannot be classified as a first-time buyer to pay no tax on a buy-to-let mortgage.
What Are First-time Buyer Rules For Multiple Applicants?
If you are applying jointly for your mortgage with a partner, spouse or anyone else, they also must meet all of the criteria to be a first-time buyer. If anyone involved directly in the purchase and joint mortgage has owned property before, you both will be ineligible for first-time buyer stamp duty rates.
Will I Have To Pay Stamp Duty As A First-time Buyer?
That depends on exactly how much the property you’re buying is worth. From 1st April 2025, first time buyers will not pay any SDLT up to £300,000.
How Much Does Stamp Duty Cost?
You may be wondering exactly how much stamp duty is likely to set you back when you buy a home. Luckily, HMRC follows a standardised tiered system, making it easy to see how much you’ll be expected to pay. Here’s what you’ll pay in Stamp Duty Land Tax (SDLT) as a first-time buyer from 1st April 2025:
0% SDLT on the first £300,000 of the property price.
5% SDLT on the portion between £300,001 and £500,000.
If the property costs more than £500,000, you won’t qualify for first-time buyer relief and must follow the standard SDLT rules for homebuyers.
Example
Let’s say you’re a first-time buyer purchasing a property valued at £500,000. Your SDLT will be calculated as follows:
0% on the first £300,000 = £0
5% on the next £200,000 = £10,000
Total SDLT = £10,000
Check the latest Stamp Duty Rates for up to date information.
Are First Time Buyers Exempt From Stamp Duty?
First-time buyers aren’t technically exempt from stamp duty, but they do get a higher threshold than standard before you need to pay anything.
From 1st April 2025, as long as your property purchase is under £300,000 you will not pay any SDLT.
When Else Will I Not Have To Pay Stamp Duty?
There are a few other specific situations where you won’t need to pay stamp duty to HMRC. These include:
When a property is transferred because of a court order during dissolution, separation, or divorce.
Property left to you in a will may not require you to pay stamp duty.
Properties that are considered zero-carbon and are worth under £500,000 do not require the payment of stamp duty.
If you are gifted a property with no mortgage, or you gift a property you solely own to someone else, stamp duty does not apply.
For more exemptions, take a look at the full list available on the HMRC website.
Can I Put My Stamp Duty On My Mortgage?
In some cases, you may be able to borrow more on your mortgage to cover the costs of stamp duty. However, this is on a case-by-case basis, and the best thing to do is to speak to your mortgage broker or lender directly about this. If you’re a first-time buyer, you won’t need to pay your stamp duty in many cases, making the need for an increased mortgage far less likely.
How Do You Pay Stamp Duty?
With all the foundations of stamp duty covered for first-time buyers, it’s time to get into the critical details. Knowing how you pay your tax, when you need to pay it, and the process itself can save you stress later down the line. Here’s how it works:
Completing Your Property Purchase
Before you even look at stamp duty rates, you need to find the property you’d like to purchase. A mortgage broker can let you know how much you can borrow from a suitable lender, whether you’re a first-time buyer, porting, or getting a buy-to-let mortgage.
Once you find your perfect property and your offer is accepted, you can start working with your conveyancer or solicitor on ensuring all taxes and fees are paid – including stamp duty.
Knowing Your Stamp Duty Rates
Before you begin the process of payment, you’ll need to know exactly how much you owe. We’ve covered all you need to know about current and future stamp duty rates above to ensure you know exactly how much you need to cover – or if you need to cover any at all.
Working With A Solicitor
If you are working with a solicitor or a conveyancer on your property purchase, they will talk you through the stamp duty process as well. They will also be able to make payment for you if you owe any money as a first-time buyer.
Making A Stamp Duty Payment Yourself
If you’re choosing to DIY and you’ve calculated that you owe nothing to HMRC based on your criteria, you’ll still need to submit your return stating that information.
You have 14 days to do so following your purchase, so make sure your return is completed as soon as possible.
Filing A Return With HMRC
Filing your stamp duty land tax is easy. To complete your return, you’ll first need to register for the stamp taxes online service. You should do this as soon as possible, as registration can take up to 10 working days.
If you are working with a qualified solicitor, they will do this on your behalf.
Making Your Stamp Duty Payment
As part of your return, you’ll make a payment directly to HMRC for your stamp duty. This payment is also due within the 14-day window following the transaction completion on your property, so make sure anything you owe is paid off as soon as possible.
If you fail to pay within that two-week window, you may be issued a fine.
Changing Land Ownership
Another thing your solicitor or conveyancer will do for you is changing ownership with the land registry. If you’d prefer, you can also opt to do this yourself.
You’ll need to have filed your return with HMRC before you do this, as you will require a certificate to prove you’ve paid any tax owed as part of the changeover process.
Do you have plans to buy a home for the first time? Whether you’re confused about stamp duty or looking for the right lender, Beechwood Mortgages can help.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Published by Beechwood Mortgages Ref: 219335 with review and approval from Stonebridge Mortgage Solutions Limited who is authorised and regulated by the Financial Conduct Authority Ref: 454811.
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