Do first-time buyers pay stamp duty?

GETTING onto the property ladder is incredibly pricey, with additional costs making it even more expensive.

One of these extra up-front payments that first-time buyers may have to fork out for is stamp duty.

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However the exact amount a buyer might have to shell out depends on the price and type of property.

You only pay when you hit a certain threshold, which is currently £425,000.

It was originally less than this, as we explain below.

If you buy a property for less than this, then you don’t have to pay the tax as a first-time buyer. 

Rules are changing again in 2025 though - below we explain all.

What is stamp duty and who has to pay?

Stamp duty land tax (SDLT) is a lump sum payment you have to make when purchasing a property over a certain threshold.

Home buyers always pay the stamp duty, not the seller.

This is often done through a solicitor on your behalf as part of the buying process.

Home buyers have 14 days from the date of purchasing a property to file a return to HMRC with any stamp duty due.

What are the rules for first-time buyers?

Not everyone pays the same amount of stamp duty.

If you are a first-time buyer you can get a discount if the following applies to you: 

• You, and anyone else you're buying with, are first-time buyers
• The purchase price is £625,000 or less

You pay the tax when you:

• buy a freehold property
• buy a new or existing leasehold
• buy a property through a shared ownership scheme
• are transferred land or property in exchange for payment, for example, you take on a mortgage or buy a share in a house

The rate a buyer has to pay depends on the price, type of property and whether or not they already own a home.

How have the rules changed recently?

Since September 2022, first-time buyers have not had to pay any stamp duty on homes costing less than £425,000.

They only have to pay it on properties costing more than this.

This figure was previously £300,000 but was increased by the then Chancellor Kwasi Kwarteng.

The maximum value of a property on which a first-time buyer's relief can be claimed also increased from £500,000 to £625,000.

Under the previous system, no stamp duty was paid on the first £125,000 of all property purchases but the government has doubled that to £250,000.

The change in thresholds will end on March 31, 2025.

Did the rules change during Covid?

The government previously introduced a stamp duty holiday for homes worth up to £500,000 during the Covid pandemic.

The aim was to give buyers a break and to buzz some energy back into the property market.

Stamp duty then went back to its previous rules in September 2021. 

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