A Guide To Stamp Duty Regulations for First-Time Buyers
In recent years, Stamp Duty has undergone significant changes, to both help support first-time buyers, and to stimulate the market following the Covid-19 pandemic.
Depending where in the United Kingdom the property is located, the rates may be different and indeed called something else as well.
To help support you and create clarity, we’ve put together a guide to help first-time buyers find out how much they must pay – and how much they can save.
The new rates
Under the new policy, first-time buyers can be completely exempt from paying Stamp Duty (or equivalent) on purchases of residential properties up to a certain amount e.g. in England it is up to £425,000.
Additionally, on purchases in England worth £425,001 to £625,000, first-time buyers will not have to pay Stamp Duty on the initial £425,000, and will then only pay 5% on the remainder. If the property is worth more than £625,000 then first-time buyers will pay Stamp Duty as normal.
As an example, if a first-time buyer is purchasing a property for £480,000, then they will pay no Stamp Duty on the first £425,000 and 5% on the remaining £55,000, which works out to £2,750. Under the previous system, the buyer would have had to pay £9,000 in Stamp Duty.
Rate amounts
Below, we have set out how much stamp duty and equivalent taxes are expected to be paid for an existing homeowner and first time buyers.
England – Stamp Duty Land Tax
|
Band |
As of October 2022 - Standard Rates |
Rate for first time buyers |
|
Up to £250,000 |
0% |
0% |
|
More than £250,000 |
5% |
0% |
|
More than £425,000 |
5% |
5% |
|
More than £625,000 |
5% |
Not eligible for relief. Follow the rules for people who have bought before. |
|
More than £925,000 |
10% |
Not eligible for relief. Follow the rules for people who have bought before. |
|
More than £1.5 million |
12% |
Not eligible for relief. Follow the rules for people who have bought before. |
Scotland – Land and Buildings Transaction Tax
|
Band |
As of October 2022 - Standard Rates |
Rate for first time buyers |
|
Up to £145,000 |
0% |
0% |
|
More than £145,000 and up to £175,000 |
2% |
0% |
|
More than £175,000 and up to £250,000 |
2% |
2% |
|
More than £250,000 and up to £325,000 |
5% |
5% |
|
More than £325,000 and up to £750,000 |
10% |
10% |
|
Over £750,000 |
12% |
12% |
Wales – Land Transaction Tax
|
Band |
As of October 2022 - Standard Rates |
Rate for first time buyers |
|
Up to £225,000 |
0% |
0% |
|
More than £225,000 and up to £400,000 |
6% |
6% |
|
More than £400,00 and up to £750,00 |
7.5% |
7.5% |
|
More than £750,000 and up to £1,500,000 |
10% |
10% |
|
More than £1,500,000 |
12% |
12% |
Northern Ireland – Stamp Duty Land Tax
|
Band |
As of October 2022 - Standard Rates |
Rate for first time buyers |
|
Up to £250,000 |
0% |
0% |
|
More than £250,000 |
5% |
0% |
|
More than £425,000 |
5% |
5% |
|
More than £625,000 |
5% |
Not eligible for relief. Follow the rules for people who have bought before. |
|
More than £925,000 |
10% |
Not eligible for relief. Follow the rules for people who have bought before. |
|
More than £1.5 million |
12% |
Not eligible for relief. Follow the rules for people who have bought before. |
Qualifying as a first-time buyer
To qualify for the Stamp Duty relief, you must be a first-time buyer, which is defined by certain criteria. The main one of these is that you should have never owned any residential property in the UK or abroad, including freeholds, an interest in leaseholds or even an inherited property, as the status of being a first-time buyer is defined by ownership rather than by having bought a property. Married couples purchasing a property together must also both qualify as first-time buyers to benefit from the Stamp Duty relief.
Unmarried couples can qualify for the reduction if the only person named on the mortgage deed is a first-time buyer. However, this means that the mortgage application can only be in one person’s name, so the amount that can be borrowed will be based on their income alone. As a result, you may find that you are not able to borrow as much as you hoped, or that the interest rates on the repayments are higher.
Since the maximum you can save with the Stamp Duty relief is £8,750, you may find it more economical to pay the duty to make the mortgage more affordable. Furthermore, if the property is only in one partner’s name, then the other will have no legal claim to the property if they split up.