Stamp duty is a major consideration whenever you want to buy a residential property. The good news is that if you’re a first time buyer, you’ll pay much less, or even nothing! Read on, and discover how stamp duty relief for first time buyers works.
FAQs
What is stamp duty?
Stamp Duty Land Tax (SDLT) is a tax paid on all property purchases over a certain value in England and Northern Ireland. Wales and Scotland don’t have SDLT, but they do have very similar schemes with slightly different rules.
Do first time buyers pay stamp duty?
First time buyers are not exempt from stamp duty. However, if you’re buying for the first time, you’ll pay less. This is because the value threshold for when you start paying SDLT is higher.
The government brought in the ‘SDLT relief for first time buyers’ policy in late 2017. It means that first time buyers pay zero stamp duty on residential property worth £300,000 or less. Normally, you start paying SDLT at £125,000.
What is the stamp duty holiday?
The stamp duty holiday was a measure introduced by the government to encourage house sales during the pandemic. It initially increased the value threshold for zero SDLT payments up to £500,000 on all residential property purchases. This rule was in effect between July 2020 and June 2021.
The stamp duty holiday was extended until the end of September 2021, but at a lower rate. There was no stamp duty to pay on a residential property bought for up to £250,000. At the start of October 2021, the stamp duty holiday ended. There are no current plans to introduce another one.
How much do first time buyers pay stamp duty in 2021?
At the time of writing (October 2021) the stamp duty payment bands have gone back to their original levels before the pandemic. That means that the amount you pay as a first time buyer is 0% if the value of the property is £300,000 or under. You will pay 5% stamp duty on the remainder of the sales price, up to a value of £500,000.
Be aware that if you are buying a property that is worth over £500,000, you will pay the normal rate of stamp duty. It doesn’t matter if you are a first time buyer in this case. The first time buyer SDLT relief policy was designed to help people get on the property ladder, which is why there is this threshold.
A simple way to figure out how much you’ll pay on your planned purchase is to use a stamp duty calculator. The HomeOwners Alliance has a good one here. They also have a full breakdown of the different stamp duty bands for all parts of the UK.
How do I qualify as a first time buyer?
Qualifying as a first time buyer is simple. Firstly, you have to have never owned a residential property before in the UK. Secondly, the property you’re buying must be your main residence, it can’t be buy-to-let or a second home.
Can I pay stamp duty in instalments?
Sadly, you cannot pay stamp duty in instalments. The full amount of SDLT owed must be paid to HM Revenue and Customs within 30 days of the completion of the property’s sale.
Can I get a refund on stamp duty?
There are some situations where you can get refunds on stamp duty. However, these are mostly related to SDLT higher charges on purchases of second homes or buy-to-let property. If you’re a first time buyer, it is unlikely that you will qualify for any stamp duty refund.
We have a full description of stamp duty refunds, and how to claim them.
How do I pay stamp duty?
Paying stamp duty is usually done by the buyer’s conveyancing solicitor as part of the sale completion. You can do it yourself if you prefer, or if you aren’t using a conveyancer. This UK Gov guide gives you an overview on how to pay stamp duty, and what deadlines are involved.
How do first time buyers avoid stamp duty?
Avoiding stamp duty as a first time buyer is difficult because there are few exceptions that apply. The best way to avoid it is to purchase a property worth under, or as close to, £300,000 as possible. If you can negotiate the price down to this marker, you’ll save yourself an SDLT bill.
Other ways to avoid stamp duty include:
Buying the property in the name of a family member, provided that they are a first time buyer.Purchasing a property worth £40,000 or less – all properties of this price are fully exempt from SDLT.Buying a motorhome, caravan or houseboat – these are all exempt from SDLT, no matter how much they cost.
If you have more specific stamp duty questions, we have answers. Our dedicated guides to paying stamp duty on a second home, or how to reclaim stamp duty can help.
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