Stamp duty for first-time buyers: how does it work?

Summary

• Stamp duty, or Stamp Duty Land Tax (SDLT), applies to many property purchases in England and Northern Ireland.

• Stamp duty in Wales and Scotland imposes different laws for local property purchases.

• First-time buyers may be eligible for certain exemptions and governed by different laws.

• A mortgage broker can provide expert guidance to ensure you pay the correct tax as a first-time buyer.

What is stamp duty?

Stamp duty is a type of property tax levied when purchasing a property or land in the UK. Its name may vary according to the region of the purchase.

In England, it is known as Stamp Duty Land Tax (SDLT) and is called Stamp Duty in Ireland. It is known as Land and Buildings Transaction Tax in Scotland and as Land Transactions Tax in Wales. 

How does stamp duty work?

Stamp duty is levied according to a series of rate bands or tiers. A property tax amount is calculated on the portion of the property purchase that falls within each rate band.

The amount of stamp duty paid on a property will depend on its purchase price and whether or not it is considered a residential property.

Stamp duty for first-time buyers will also depend on these factors, as well as your property’s location within the UK.

Do first-time buyers pay stamp duty?

As a first-time buyer, you will only be required to pay stamp duty if your property’s value exceeds a certain amount.

First-time buyers in England and Northern Ireland are taxed at a higher threshold for stamp duty due to their governments’ relief schemes.

Should you purchase a property worth more than £625,000, standard stamp duty rates apply.

Stamp Duty in England and Ireland is levied according to the following rates:

However, for the 2025 tax year, SDLT rates will be subject to changes.

From 31 March 2025, the stamp duty cuts implemented by the previous government will be removed, and SDLT thresholds will return to their prior levels.

The current SDLT nil-rate threshold for first-time buyers is £425,000, but from 1 April 2025, this will return to £300,000—the same rate prior to 23 September 2022.

Those purchasing a second home may also pay additional stamp duty levies.

Stamp duty on second homes in the UK is higher than on primary residences and includes an extra 3% surcharge over and above standard rates in Northern Ireland and England.

Stamp duty in Scotland and Wales

There is no stamp duty for first-time buyers in Scotland (known locally as Land and Buildings Transaction Tax) on properties valued at up to £175,000. 

Property buyers in Wales do not pay stamp duty (known locally as Land Transaction Tax) on properties valued at up to £225,000. 

Stamp duty for non-UK residents

Purchasers of property in England and Northern Ireland who are not UK residents will pay different Stamp Duty Land Tax rates.

The rates are 2%  higher than those which apply to UK residents. 

You can still pay standard stamp duty rates if you have been in the UK for at least 183 days in the 12 months before your purchase.

Stamp duty for mixed-use property rates

You must pay SDLT on increasing portions of your property’s price when paying £150,000 or more for ‘mixed use’ or non-residential property or land.

A mixed-use property is one that has both residential and non-residential facilities or elements, such as a flat connected to a doctor’s office.

Do I qualify for stamp duty discounts as a first-time buyer?

There are certain criteria you’ll need to meet to qualify for first-time buyers’ stamp duty discounts.

You will only quality if:

• The home you are purchasing will be your sole or main residence.

• You have not previously owned a freehold residential property.

• You do not have existing leasehold interests.

• You have never owned or inherited a foreign property.

Do both parties need to be first-time buyers?

Purchasing a property with another person may make acquiring land or a home more accessible.

However, if you wish to benefit from the first-time buyers’ stamp duty relief scheme, all the buyers involved in your application must be first-time buyers.

If you are purchasing your first property but the other applicant already owns a home, standard stamp duty rates will be applied to your purchase.

How do first-time buyers pay stamp duty?

First-time buyer stamp duty is usually paid with the assistance of a conveyancer or solicitor. The process is similar for first-time buyers and repeat buyers.

Start by filing a stamp duty return. If you owe any duties, send payment to HMRC within 14 days of the completion date of your purchase.

You will be supplied with an 11-character transaction reference number.

Select a payment method that suits your needs (such as bank transfer, online payment, or cheque) and settle your outstanding amount using your transaction number as a reference.

What happens if you file your stamp duty late?

Remember to file your Stamp Duty on time, as penalties may apply for late filings.

If you are up to three months late, you could be fined £100, and if you are more than three months late, you could expect to pay a fine of £200. You’ll also be charged interest. 

Work with the solicitor or conveyancer assisting you with your purchase to ensure your stamp duty return is filed on time.

Seek expert financial advice

Stamp duty is applicable to most property purchases in England and Northern Ireland. 

While it is often lower for first-time property buyers, it is important to understand which tax rate tier your property falls into and how to file your stamp duty return to ensure you are compliant and avoid penalties.

Let Unbiased match you with a mortgage adviser for expert financial advice on your property purchase.