For many stepping onto the property ladder for the first time, understanding Stamp Duty Land Tax (SDLT) can be overwhelming.
This government tax applies to property purchases in England and Northern Ireland, and from April 2025, updated thresholds have changed what first-time buyers will pay.
Whether you’re planning to buy a home in a rural area or a city like London, these changes may affect your overall costs. Knowing how much you’ll pay, what reliefs are available, and how to qualify is essential to making a smart and informed buying decision.
What Is Stamp Duty Land Tax and How Does It Work for First-Time Buyers?
Stamp Duty Land Tax (SDLT) is a tax payable when you purchase a residential or non-residential property in England and Northern Ireland. For first-time buyers, it offers some relief, but only if the property price meets specific thresholds.
This tax applies to:
- Freehold or leasehold purchases
- Shared ownership schemes
- Transfers involving mortgage payments
The tax is calculated on the part of the property price that falls within certain price bands. First-time buyers benefit from reduced rates on properties worth up to £500,000.
You don’t pay SDLT on properties under £300,000, but you’ll pay 5% on the portion between £300,001 and £500,000. Properties above £500,000 aren’t eligible for this relief. The system is designed to help new buyers but becomes less beneficial in high-price areas.
What Are the Stamp Duty Changes Made for First-Time Buyers in 2025?
Significant changes to SDLT came into effect on 1st April 2025, impacting both first-time and non-first-time buyers. These adjustments have lowered thresholds, increasing tax liabilities for many.
Here’s a breakdown of the revised SDLT thresholds for first-time buyers:
| Price Band | Stamp Duty Rate |
| £0 – £300,000 | 0% |
| £300,001 – £500,000 | 5% (on the portion above £300,000) |
| Over £500,000 | Standard SDLT rates apply |
Before April 2025, first-time buyers paid nothing up to £425,000 and received relief on purchases up to £625,000. Now, relief ends at £500,000.
This change means buyers of mid-range properties will likely pay more. The update aims to standardise the system, but it has made affordability more challenging for many entering the housing market.
Do First Time Buyers Pay Stamp Duty?
Yes, first-time buyers do pay Stamp Duty, but only when the property price exceeds £300,000. The government offers relief for eligible buyers to reduce the cost of purchasing a home.
If your chosen home costs under £300,000, you won’t pay any Stamp Duty. However, if the price is between £300,001 and £500,000, you’ll pay 5% on the amount above the £300,000 threshold.
For homes over £500,000, first-time buyers are no longer eligible for any relief and must pay standard rates.
How Much Stamp Duty Will You Pay?
The amount of Stamp Duty first-time buyers pay depends on the property’s purchase price. Here’s how it works under the new rules effective from April 2025:
| Property Price | SDLT Payable |
| £295,000 | £0 |
| £304,000 | 5% on £4,000 = £200 |
| £500,000 | 5% on £200,000 = £10,000 |
| £505,000 | Standard SDLT rates apply (no relief) |
Only the amount exceeding £300,000 is taxed at 5%. Properties over £500,000 receive no relief, meaning buyers must follow the regular SDLT rates applied to all homebuyers.
What Is the 5% Rate and When Does It Apply?
The 5% SDLT rate applies to the portion of a first-time buyer’s property that falls between £300,001 and £500,000.
Here’s what you need to know:
- The first £300,000 is tax-free
- Any value between £300,001 and £500,000 is taxed at 5%
- Homes above £500,000 do not qualify for relief
This banded tax system ensures buyers only pay tax on the portion above the exempt threshold. For example, a £400,000 property would result in a tax of £5,000, which is 5% of £100,000.
How Is the SDLT Calculated on Partial Amounts Over the Threshold?
Stamp Duty is calculated using a banded system. That means tax is not applied to the total property price but only to the portion above certain limits.
Example calculations:
- If a home is £304,000:
- First £300,000 = 0%
- £4,000 at 5% = £200
- If a home is £500,000:
- First £300,000 = 0%
- £200,000 at 5% = £10,000
Buyers purchasing homes above £500,000 will not qualify for any relief, so the entire value will be taxed using standard SDLT rates.
Who Is Eligible for the First-Time Buyer Stamp Duty Relief?
To qualify for the first-time buyer SDLT relief, you must meet all government conditions at the time of purchase. This relief is only available for properties in England and Northern Ireland.
You’re eligible if:
- You’re purchasing your first home
- The home will be your main residence
- You’ve never owned a residential property anywhere (including abroad)
- You don’t currently hold any leasehold interest
- You are a UK resident or meet the criteria
Important: If buying with another person, both buyers must be first-time buyers. If one has previously owned property, standard SDLT applies to the entire transaction. Always confirm eligibility before proceeding to ensure you benefit from the relief.
How Do Property Prices in Different UK Regions Affect First-Time Buyers?
Regional house prices play a significant role in whether a first-time buyer pays SDLT. In areas like London, where average property prices exceed £531,000, most first-time buyers will not receive any SDLT relief.
High-impact regions include:
- South East England
- South West England
- East of England
By contrast, in the North East or Midlands, many first-time buyers will still find homes below the £300,000 threshold.
The UK average house price in 2024 was £293,200, which is below the current SDLT limit. This means that location significantly affects whether tax is payable on your first property purchase.
What Happens If You’re Buying with Someone Who Isn’t a First-Time Buyer?
If you’re purchasing a home jointly and only one of you is a first-time buyer, you won’t be eligible for the first-time buyer relief. The government requires all buyers named on the purchase to qualify in order to claim the exemption.
In this case:
- Standard SDLT rates apply
- Even if one buyer qualifies, the relief is not partial
- The full purchase will be taxed as if all buyers were previous homeowners
Example:
- Buyer A has never owned a home
- Buyer B has previously owned one
- They buy a property for £400,000. Result: Full SDLT applies without relief
This rule ensures fairness but can significantly impact co-buyers, especially couples or friends purchasing together.
How Does Stamp Duty Work for Special Cases Like Shared Ownership or Mixed-Use Properties?
Stamp Duty rules become more complex when it comes to shared ownership and mixed-use properties. These types of purchases have unique regulations and may not qualify for standard first-time buyer relief.
| Property Type | Relief Eligibility | Tax Rule |
| Shared Ownership | Partial, depending on method | Option to pay on full market value or in stages |
| Mixed-Use (e.g. flat + shop) | Not eligible | Taxed under non-residential/mixed rates |
For shared ownership, buyers can choose to:
- Pay SDLT based on the full market value (one-time)
- Pay in stages as they buy more shares
Mixed-use properties are not considered residential only, so first-time buyer relief does not apply. These properties are taxed using commercial or mixed-use rates, which differ from standard residential rates.
Are There Different Stamp Duty Rules in Scotland and Wales for First-Time Buyers?
Yes, Scotland and Wales follow their own property tax systems, which are different from those in England and Northern Ireland. In Scotland, the Land and Buildings Transaction Tax (LBTT) applies, where first-time buyers pay 0% tax on properties valued up to £175,000.
Meanwhile, in Wales, the Land Transaction Tax (LTT) is in place. Under this system, there is no Stamp Duty on homes up to £225,000, though unlike England, there is no specific first-time buyer relief scheme.
It’s important to note that Stamp Duty Land Tax (SDLT) only applies in England and Northern Ireland. As a result, property buyers in Scotland or Wales must follow their respective tax rules. Always confirm rates and thresholds with local authorities before making a purchase.
Conclusion
Stamp Duty Land Tax is a major factor to consider when buying your first home in the UK. With changes from April 2025 lowering relief thresholds, more first-time buyers may now face tax costs, especially in high-priced regions.
Understanding when the tax applies, how much you’ll pay, and whether you qualify for any exemptions can save you thousands. Always assess your eligibility, the property price, and location before committing to a purchase.
Planning early and staying informed will help make your first step onto the property ladder smoother and more financially manageable.
Frequently Asked Questions
Can first-time buyers claim a refund on overpaid Stamp Duty?
Yes, you can claim a refund if you mistakenly paid higher rates and later prove eligibility for relief. Refunds are typically processed by HMRC within 15 working days.
Is there a Stamp Duty surcharge for first-time buyers who aren’t UK residents?
Yes, non-UK residents usually pay a 2% surcharge unless they meet the 183-day residency requirement. This applies even if they are eligible first-time buyers.
Do first-time buyers need to pay SDLT on inherited property or gifts?
Stamp Duty does not apply to inherited properties or gifts without consideration. However, tax is due if the transfer involves payment or assumption of debt.
What is the deadline to pay SDLT after buying a property?
SDLT must be paid within 14 days of property completion. Your solicitor or conveyancer usually handles this on your behalf.
Does shared ownership always result in Stamp Duty for first-time buyers?
Not always. You can choose to pay on the full market value upfront or in stages as you purchase more shares.
How is SDLT handled for leasehold purchases by first-time buyers?
You pay SDLT on the lease premium and may owe additional tax if the net rent exceeds the threshold. The SDLT calculator helps determine exact amounts.
What happens if you buy more than one property as a first-time buyer?
Once you own another property, you are no longer classified as a first-time buyer. Future purchases may also include a 3% surcharge for additional homes.
