07 Feb 2025

First time buyers' relief for stamp duty land tax (SDLT)

Saving for a first home can be challenging and the costs of buying a property can quickly add up. However, individuals who have never owned a home before might qualify for a first-time buyers’ relief for stamp duty land tax (SDLT). With first time buyers’ SDLT relief, the tax on buying a new home may be either eliminated or significantly reduced.

What is first-time buyers’ stamp duty relief?

To help support those struggling to meet the upfront costs of buying a first home, the government introduced relief on SDLT for first time buyers in November 2017. This applies to house purchases in England and Northern Ireland.

For anyone meeting the definition of a first-time buyer, a higher SDLT threshold applies. From September 2022, any first-time buyer purchasing a property worth £425k or less will pay no SDLT at all. This limit is due to remain until in place until 31 March 2025 when it is due to revert to £300,000.

It is worth noting that even if there is no SDLT to pay, you must still complete a return to claim the first-time buyers’ SDLT relief. Usually, the conveyancing solicitor drafts and submits the return, so it is important to make them aware if you are a first-time buyer.

Who is a first-time buyer?

To qualify for first-time buyers’ SDLT relief, an individual must be buying a single dwelling which they intend to be their main residence. It must also be the first dwelling that they have owned either in the UK or anywhere else in the world. If an individual has previously received or inherited a residential property or intends to use their new property as a buy-to-let investment, they will not be eligible for first-time buyers’ SDLT relief.

When a person is buying with someone else, both individuals must meet the definition of a first-time buyer to qualify for the relief. Therefore, if either of you already own a house, relief is not available. This applies regardless of whether you will become joint tenants or tenants in common.

Stamp duty land tax rates for first-time buyers

For first-time buyers who buy a property worth up to £425k, there is no stamp duty land tax to pay. Properties worth between £425k-625k are taxable at a SDLT rate of 5% on the proportion of the consideration above £425k. For example, if you are a first-time buyer purchasing a property at a price of £500k, you would pay a stamp duty of £3,750 (being 5% of £75k).

If you are paying more than £625k for your first home, first-time buyers’ stamp duty relief is not available and normal SDLT rates apply.

Purchase price Stamp duty rate
Up to £425,000 (first-time buyer threshold)

 

0%
Section of price between £425,000-£625,000

 

5%
£625,000 and above

 

No relief, must pay at normal rates

 

Which types of mortgages or borrowing structures might qualify for first-time buyer stamp duty relief?

  • Help-to-buy

    Genuine first-time buyers using a help-to-buy mortgage can make use of stamp duty relief.

  • Shared ownership

    Regardless of whether someone chooses to pay stamp duty on the full value or only on the share a person is buying initially, stamp duty relief is available with shared ownership if the market value is £625k or less.

  • Joint mortgage

    If two individuals are buying a property on a joint mortgage, the transaction may be eligible for first-time buyer stamp duty relief but only if both individuals meet the definition of first-time buyer.

  • Joint borrower sole proprietor mortgage

    It may be possible to claim first-time buyers’ relief where the other joint borrower has no beneficial interest or right to occupy the property (where they would otherwise not be a first-time buyer). There are special rules applying when taking on a new lease for a flat.

  • Gifted deposit mortgage

    Assuming the person who is buying the house is receiving a true gifted deposit, and the donor will not appear on the title deeds or have any beneficial interest in the property, the buyer will be eligible to claim stamp duty relief.

We recommend all those borrowing to take independent financial advice. Consider the terms to ensure you meet the relief rules.

What if I am buying a first home in Wales or Scotland?

Unfortunately, there is no first-time buyers’ stamp duty relief available for first homes purchased in Wales.

Scotland has its own stamp tax regime and has a relief for first-time buyers which increases the nil-rate band of land and building transaction tax (LBTT) to £175k. There is a maximum limit relief in Scotland of £600, which is far less generous than in England and Northern Ireland.

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