Guide

Stamp duty explained for first-time buyers

Stamp duty is a tax on property purchases. As a first-time buyer, you benefit from reduced rates, but the rules are more nuanced than most buyers realise, and they have changed in recent years and may change again. Getting this wrong in your budgeting can mean an unpleasant surprise when it comes to completing.

This article explains how stamp duty works for first-time buyers in England, what you will pay at different price points, and what to watch out for.

What is stamp duty?

Stamp duty land tax (SDLT) is a tax charged on the purchase of residential property in England and Northern Ireland. Scotland has its own equivalent: Land and Buildings Transaction Tax (LBTT). Wales has Land Transaction Tax (LTT). The rates and thresholds differ between nations, so if you are buying outside England, check the rules that apply to you.

The tax is calculated as a percentage of the purchase price, applied in bands. The rate increases on the portion of the price that falls within each band; it is not applied to the whole price at the highest rate.

Current rates for first-time buyers in England

First-time buyers benefit from a stamp duty relief that reduces the amount payable compared to standard rates.

At the time of writing, the thresholds for first-time buyers in England are:

• On the first £425,000 of the purchase price: 0%, no stamp duty payable.
• On the portion between £425,001 and £625,000: 5%.
• Above £625,000: first-time buyer relief does not apply and standard rates are used throughout.

This means that if you are buying your first home for £425,000 or less, you pay no stamp duty at all. If you are buying for £500,000, you pay 5% on the £75,000 above the threshold, that is £3,750.

If the property costs more than £625,000, you pay stamp duty at the standard rates from the first pound, which removes the first-time buyer relief entirely.

A few worked examples

• Property price: £280,000. First-time buyer relief: the full price falls below £425,000. Stamp duty payable: £0.
• Property price: £450,000. First-time buyer relief applies: 0% on the first £425,000, 5% on the remaining £25,000. Stamp duty payable: £1,250.
• Property price: £600,000. First-time buyer relief applies: 0% on the first £425,000, 5% on the remaining £175,000. Stamp duty payable: £8,750.
• Property price: £650,000. First-time buyer relief does not apply. Standard rates are used. Stamp duty payable: £22,500 (calculated at standard residential rates).

These thresholds have changed before

This is important to flag clearly. The first-time buyer stamp duty thresholds changed in September 2022, when the exemption threshold was raised from £300,000 to £425,000. They then changed again in April 2025, when a temporary increase was reversed and the thresholds reverted to earlier levels.

The figures in this article reflect the position at the time of writing, but stamp duty policy is subject to change at each Budget. Before you make any financial decisions based on stamp duty calculations, verify the current rates directly with HMRC or confirm them with your solicitor.

Your solicitor is responsible for calculating and submitting the stamp duty payment on your behalf after completion. They will confirm the exact amount due based on the rates in force on your completion date.

When is stamp duty paid?

Stamp duty is not paid at the time you make an offer or exchange contracts. It is payable within 14 days of completion.

In practice, your solicitor handles this on your behalf. They will ask you to put them in funds for the stamp duty amount before completion, and they will submit the return and payment to HMRC after the transaction completes.

Make sure you have budgeted for any stamp duty payable as a cash cost on top of your deposit and other fees, it cannot be added to your mortgage.

What counts as a first-time buyer?

To qualify for first-time buyer relief, you must meet the following conditions:

• You must never have owned a residential property before, either in the UK or abroad. This includes inherited property: if you have inherited a share of a residential property, you may not qualify as a first-time buyer for stamp duty purposes.
• All buyers on the transaction must be first-time buyers. If you are buying with a partner or friend who has previously owned a property, first-time buyer relief does not apply to the transaction. The standard rates apply in full.
• The property must be purchased with the intention of using it as your main residence.

Shared Ownership and stamp duty

If you are buying through the Shared Ownership scheme, you have two options for how stamp duty is handled.

You can pay stamp duty on the full market value of the property at the time of purchase (called a market value election). This means paying more upfront, but it means that when you staircase, buying additional shares, no further stamp duty is payable until you reach 80% ownership or above.

Alternatively, you can pay stamp duty only on the share you are purchasing. This reduces the upfront cost, but stamp duty will be payable again each time you staircase, calculated on the share you are buying at the price at that time.

For most buyers, paying on the full market value at the outset is simpler and often more cost-effective over time, but the right choice depends on your plans for staircasing. Your solicitor can advise you on the most appropriate approach for your situation.

What happens if you receive a gifted deposit?

Receiving a gifted deposit from a family member does not affect your stamp duty position. Stamp duty is based on the purchase price of the property, not on how the purchase is funded.

Have a chat, no pressure

This article is for informational purposes only and does not constitute financial advice. Stamp duty rates and thresholds are subject to change, so always verify current rates with HMRC or your solicitor before budgeting. Speak to a qualified mortgage adviser before making decisions about borrowing.