Where do you start when buying your first home? The initial piece of information home buyers want to know is how much Stamp Duty they will pay.

Stamp Duty can be a complex topic, which is where we come in with this handy guide to Stamp Duty. We’ll simplify what Stamp Duty is and how much you are required to pay.

What Is Stamp Duty?

Stamp Duty is a tax. If you’re buying a residential property in England or Northern Ireland valued at over £125,000 or a second home/piece of land over £40,000, you may be required to pay Stamp Duty. Unless you’re a first-time buyer.

The forms of purchase which are subject to Stamp Duty are:

There are also different taxes depending on your location.

In England and Northern Ireland, there is a tax surcharge of 3%, on top of the normal Stamp Duty tax, which applies to additional properties such as second homes and ‘Buy to Let’ properties. Whereas, in Wales and Scotland, it’s charged at 4%.

Do First Time Buyers Pay Stamp Duty?

First introduced in November 2017, as a first-time buyer, you’ll pay no Stamp Duty on properties costing under £300,000. However, if the property costs more than £500,000, you will not be eligible for Stamp Duty relief, and you will pay SDLT at the full rate.

As a first-time buyer in Wales, you won’t have to pay land transaction tax on the first £180,000 of your property.

As a first-time buyer in Scotland, you won’t pay land and buildings transaction tax on the first £175,000 of a property.

Who Qualifies For First-Time Buyers Relief?

To be considered eligible for first-time buyer Stamp Duty, you must meet the following requirements:

  • You are a first-time buyer.
  • You have not previously owned an interest in a property located in the Uk or abroad.
  • You intend to live in the home as your primary residence.
  • If you have received a residential property through inheritance, as a gift, or intend on using your new property as a buy-to-let investment, you will not qualify for first-time buyer Stamp Duty relief.
  • If buying in joint names, both buyers must meet the first-time buyer criteria to qualify for the relief.

How Much Stamp Duty Do I Pay As A First Time Buyer?

When a house purchase price is between £300,000 and £500,000, you’re required to pay a surcharge of 5% on the purchase price. This is £5,000 less than you would have paid if you were not a first-time buyer.

Stamp Duty Rates for first-time buyers

Property Value SDLT Rates
Up to £300,000 0%
Ranging between £300,001 to £500,000 5%

Find out how much Stamp Duty tax you will pay by using the Government Stamp Duty Land Tax Calculator.

Stamp Duty For Non-UK Residents

As a non-UK resident trying to buy a residential property in England or Northern Ireland, from 1 April 2021 for properties costing more than £40,000, you may need to pay an additional 2% on top of the existing Stamp Duty rates.

According to Patrick Cannon, the non-UK resident SDLT surcharge will apply at a rate of 2% above the residential rates, including the higher rates for additional dwellings and companies, the 15% rate and the first-time buyers’ rates on residential property bought by non-residents.

When Do You Have To Pay Stamp Duty?

You have 14 days from the date of your completion to file an SDLT return and pay any SDLT due. If you fail to submit a tax return and pay the taxes within 14 days, HMRC may charge you penalties and interest.

Your solicitor will deal with the Stamp Duty return and any payment due for you. However, you can deal with this yourself. Regardless, you’re responsible for making sure they’re completed on time.

Visit the Government website to find out more about paying your Stamp Duty.

What Is The Current Stamp Duty Holiday Threshold?

The Stamp Duty holiday was first introduced in July 2020 to help buyers buy a property after the economy was affected by the coronavirus pandemic. It meant that homebuyers would not pay Stamp Duty for a property up to the value of £500,000.

However, Stamp Duty in England and Northern Ireland ended on September 30th 2021 and Stamp Duty returned to its previous state.

According to Homebuilding & Renovating, homebuyers were able to save a maximum of £15,000 through the tax break, and Rightmove estimates that one million households benefited from a Stamp Duty saving, a total of £6.1 billion.

Stamp Duty for First Time Buyers: Frequently Asked Questions

If you are unable to buy your full home due to high prices but would still like to invest in real estate, shared ownership might be an alternative option. 

 

Otherwise known as ‘Part Buy, Part Rent’, the scheme allows you to buy a share of a property and pay rent on the rest. You’ll buy a portion of the property, between 25% and 75%, from a housing association and pay 3% rent for the remaining share.

Shared Ownership purchases are often first time buyers. When purchasing a Shared Ownership property as a first-time buyer, you will have the option of paying Stamp Duty on the full value of the property purchase as if you were buying outright.

Alternatively, you can choose to pay Stamp Duty on just the share that you are purchasing instead of the entire purchase price.

You might also be subject to a Stamp Duty charge called the ‘net present value’, which is based on the rent payable over the term of your lease.

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