BUYING your first home is costly enough as it is, but depending on the price, you may have to pay stamp duty on top.
It’s an expensive up-front payment for first-time buyers and it may be difficult to avoid.
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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:
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.
