If you’re stepping onto the property ladder for the first time, it is important to understand the additional costs involved with residential property transactions. One of the biggest of these costs is stamp duty, which varies depending on the property price, location, and your status as a buyer. AFG Law breaks down what first-time buyers need to know about Stamp Duty Land Tax (SDLT).
For expert advice on stamp duty for first time buyers, contact the residential conveyancing team and AFG Law.
What Is Stamp Duty and Who Pays It?
When buying residential property in England and Northern Ireland, buyers pay a government tax called Stamp Duty Land Tax (SDLT). This applies to most property purchases over a certain value. The amount you are required to pay depends on the purchase price, whether you are a first-time buyer, and whether you are buying your main home or an additional property.
In Wales, a similar but separate tax applies, called Land Transaction Tax (LTT).
Stamp Duty Relief for First-Time Buyers
The UK Government has long offered Stamp Duty Land Tax relief for first-time buyers to make property purchases more affordable. This relief is still available, but the rules changed in March 2025, affecting how much tax you might owe when buying your first residential property.
Under the rules introduced in March 2025, first-time buyers purchasing property in England or Northern Ireland benefit from the following:
- Pay 0 on the first £300,000 of the purchase price
- Pay 5% on the portion of the price between £300,001 and £500,000
- If the property price is over £500,000, you pay the standard stamp duty rates on the entire amount and no relief is available
Understanding the Stamp Duty Threshold
The stamp duty threshold is the minimum property price at which buyers pay SDLT. For first-time buyers, the threshold is effectively £300,000, meaning they pay no SDLT below that level.
For example, if you’re a first-time buyer and purchase a home for £275,000, you will pay 0 in Stamp Duty Land Tax. If you buy a residential property for £350,000, you will pay 5% on the portion above £300,000, which means £2,500 in SDLT.
However, if your purchase price is £510,000, you no longer qualify for the relief. In that case, you will be subject to the standard stamp duty rates that apply to all buyers, regardless of whether it’s your first home.
Standard Stamp Duty Rates for Residential Property
If you are not eligible for first-time buyer relief, or if your property price is too high, you will pay SDLT according to the following bands in England and Northern Ireland:
- 0% on the first £125,000
- 2% on the portion from £125,001 to £250,000
- 5% on the portion from £250,001 to £925,000
- 10% from £925,001 to £1.5 million
- 12% above £1.5 million
These rates apply to most residential property purchases, and your duty land tax (SDLT) bill will increase progressively as the purchase price rises.
What About Wales?
In Wales, Stamp Duty Land Tax has been replaced by Land Transaction Tax (LTT), which operates under a different structure. Unlike England and Northern Ireland, first-time buyers in Wales do not currently receive any relief or discount.
Under the LTT rules, buyers pay:
- 0% on the first £225,000
- 6% on the portion between £225,001 and £400,000
- Higher rates for more expensive properties
So, if you are purchasing a residential property in Wales for £350,000, you will pay 6% on £125,000, resulting in an LTT bill of £7,500. The absence of a stamp duty threshold tailored for first-time buyers in Wales makes purchasing a home there more expensive for new buyers compared to property in England.
March 2025 Rule Changes: What’s Different?
Before March 2025, the rules were more generous. First-time buyers paid 0% on the first £425,000, and 5% on the portion between £425,001 and £625,000. If your purchase price was below £625,000, you could still benefit from reduced rates.
However, after the changes introduced in March 2025, the relief became more restricted. The stamp duty threshold was lowered to £300,000, and the purchase price cap for eligibility dropped to £500,000. This means many buyers in high-cost areas, such as London and the South East, no longer qualify for first-time buyer relief.
Additional Surcharges and Exceptions
While first-time buyers generally benefit from lower rates, there are scenarios where additional charges may apply. For example:
- If you are buying a second home, a 3% surcharge applies on top of your SDLT
- If you are a non-UK resident, you’ll pay an additional 2%
- These surcharges apply regardless of whether you’re a first-time buyer
Additionally, if you inherited property, previously owned a share in a home, or bought a home overseas, you may not be classed as a first-time buyer, even if you’ve never purchased a property in the UK.
Paying Stamp Duty: What You Need to Know
Paying stamp duty is a key part of completing your property purchase. Whether you are paying Stamp Duty Land Tax in England and Northern Ireland, or Land Transaction Tax in Wales, your solicitor or conveyancer will usually calculate the amount and file the return on your behalf.
This must be done within 14 days of completion. Missing this deadline can result in penalties and interest charges, so it’s crucial to plan ahead.
If you are buying jointly with someone else, remember that everyone involved must meet the first-time buyer criteria to qualify for relief. Otherwise, you’ll be taxed as though you’re not eligible.
How Can AFG Law Assist?
Buying your first residential property can be both exciting and overwhelming. Understanding how stamp duty works, and how much you will need to pay, can make a big difference when budgeting for your move.
It is important that you consult with your solicitor or conveyancer early in the process to confirm your eligibility and plan for paying stamp duty properly.
AFG Law has a team of specialist Solicitors and conveyancers to assist clients with buying a property. We can help first time buyers to understand their obligations when it comes to paying stamp duty.
We can effectively assist clients throughout England and Wales and are not bound by location to assist with a property transaction, so please do not hesitate to get in touch with us today for advice or assistance.
To contact one of the residential team, we can be contacted via email at residentialproperty@afglaw.co.uk, or to speak to one of our experts, please call 01204 920108.