Are First-Time Buyers Exempt From Stamp Duty? Rates and Claims

First-time buyers in England and Northern Ireland are not fully exempt from stamp duty, but they pay less than everyone else. First-time buyer stamp duty relief means no Stamp Duty Land Tax on the first £300,000 of the purchase price and 5% on any portion between £300,001 and £500,000. Buy a home priced above £500,000 and the relief disappears entirely — you pay standard rates on the whole price. The maximum saving compared with a previous homeowner is £5,000.¹

Who Qualifies as a First-Time Buyer

HMRC’s definition is strict. You must never have owned a residential property anywhere in the world, alone or jointly. That includes freeholds, leaseholds with more than 21 years remaining, and homes acquired by inheritance or gift.² A flat you owned overseas a decade ago counts. A house you inherited from a relative counts. There’s no value threshold and no expiry: previous ownership is permanent.

One narrow exception: a lease you held with fewer than 21 years left isn’t a “major interest” and won’t disqualify you.

Buying With Someone Else

Every buyer on the transaction must qualify. If your partner, spouse, or co-purchaser has previously owned a home anywhere, the whole purchase loses access to the relief. You can’t split the transaction so that only the qualifying buyer claims the discount.² Buying a part share so that you jointly own with an existing owner also fails, because both of you are legally “purchasers” and one of you isn’t a first-time buyer.

The Rates and What They Cost

From 1 April 2025, first-time buyer rates are:

Up to £300,000: 0%
£300,001 to £500,000: 5% on the portion above £300,000

Worked at common prices:

£250,000 purchase: £0
£350,000 purchase: £2,500
£500,000 purchase: £10,000

The £500,000 ceiling is a cliff, not a taper. At £500,000 you pay £10,000. At £500,001 you lose the relief completely and pay £15,000 under standard rates.¹ Negotiating a price to sit at or below £500,000 is worth real money.

How Much You Actually Save

Without the relief, standard SDLT bands from 1 April 2025 charge 0% up to £125,000, 2% from £125,001 to £250,000, 5% from £250,001 to £925,000, 10% up to £1.5 million, and 12% above that.¹

On a £300,000 home, a previous owner pays £3,500 and a first-time buyer pays nothing. On a £500,000 home, the standard bill is £15,000 against £10,000 for a first-time buyer, a £5,000 saving — the maximum the relief can deliver, since anything above £500,000 doesn’t qualify.

What the Property Has to Be

The relief only applies to a single residential dwelling you intend to live in as your main home. Buy-to-let purchases and second homes are out, even if you’ve never owned property before.³ The building must be habitable on the day you complete. Bare land and mixed-use commercial property don’t qualify.

Shared Ownership

Shared ownership purchases can claim the relief as long as the full market value of the property is £500,000 or less and you’ll live there.³ The £500,000 cap looks at the total market value, not the share you’re buying.

You choose between two ways to pay SDLT on shared ownership:⁴

A market value election pays SDLT up front as if you bought the whole property, and no further SDLT falls due when you staircase later.
Paying in stages charges SDLT only on the premium for your initial lease. Nothing more is due on staircasing until your share passes 80%, at which point SDLT is calculated on the total you’ve paid across all transactions.

First-time buyer relief only applies to the initial purchase. Later staircasing steps aren’t eligible, but they also don’t retroactively undo the original claim.⁵

When a Joint Purchase Forces Higher Rates

Buying with someone who already owns another home can trigger the higher rates for additional dwellings, a 5% surcharge on each band, applied to the whole transaction. That happens even when you personally have never owned property. When the higher rates apply, first-time buyer relief can’t be claimed, because one of the purchasers isn’t a first-time buyer.⁶ Worth knowing before committing to a joint purchase with a partner who owns property elsewhere.

The Non-UK Resident Surcharge

If you haven’t been present in the UK for at least 183 days in the 12 months before completion, you’re a non-UK resident for SDLT purposes and pay a 2 percentage point surcharge on top of whatever rates would otherwise apply, including first-time buyer rates.⁷ A non-resident first-time buyer purchasing at £400,000 would pay 2% on the first £300,000 and 7% on the next £100,000, so £13,000 rather than the £5,000 a UK-resident first-time buyer would pay.

For joint buyers, if either person is non-resident, both are treated as non-resident. The exception is spouses or civil partners who aren’t separated: if one is UK resident, both are. You can reclaim the 2% surcharge if you go on to spend at least 183 days in the UK during any continuous 365-day period falling within the two years around the transaction date.⁷

How to Claim the Relief

The relief is claimed on the SDLT return (form SDLT1), which HMRC requires for every property transaction. Your solicitor or conveyancer enters relief code 32 in the relief section of the return.³ Each buyer supplies a National Insurance number, and the return records the price and the effective date, usually the day of completion.⁸

Once HMRC accepts the return, an SDLT5 certificate is issued. The Land Registry needs that certificate before it will register the property in your name, so a mistake on the return can hold up the legal transfer.⁹

The 14-Day Deadline

The return must reach HMRC within 14 days of the effective date, even when no tax is owed. Miss that and you get an automatic £100 penalty, rising to £200 if the return is more than three months late, plus interest on any unpaid tax.⁹ Your solicitor handles this as a routine part of conveyancing, but the penalty falls on you, so it’s worth confirming the return has actually gone in.

If You Missed the Relief and Paid Too Much

Where you qualified but the relief wasn’t claimed on the original return, you have 12 months from the filing date to amend the return and get a refund. This can be done online through HMRC’s portal. A written claim needs to include the Unique Transaction Reference Number, all buyers’ names, the error, revised figures, the refund amount, and your bank details.⁹

After the 12-month window closes, overpayment relief remains available for up to four years from the effective date of the transaction.¹⁰ If you completed recently and think the relief should have applied, check early. HMRC rejects amendment requests that are missing required documents.

Scotland and Wales Are Different

SDLT applies only in England and Northern Ireland. Scotland charges Land and Buildings Transaction Tax, and Wales charges Land Transaction Tax. Each has its own thresholds and its own first-time buyer rules, and the figures above don’t apply to a purchase in either country.¹¹

1
GOV.UK. Stamp Duty Land Tax: Residential Property Rates
2
HM Revenue & Customs. SDLTM29845 – Definition of a First-Time Buyer FA03/SCH6ZA/PARA6
3
GOV.UK. Stamp Duty Land Tax Relief for Land or Property Transactions
4
GOV.UK. Stamp Duty Land Tax: Shared Ownership Property
5
GOV.UK. Relief for First-Time Buyers in Cases of Shared Ownership
6
GOV.UK. Higher Rates of Stamp Duty Land Tax
7
GOV.UK. Rates of Stamp Duty Land Tax for Non-UK Residents
8
GOV.UK. Guide for Completing Paper SDLT1 Returns
9
GOV.UK. Stamp Duty Land Tax Online and Paper Returns
10
HM Revenue & Customs. SDLTM54000 – Overpayment Relief: Commencement and Time Limits
11
GOV.UK. Stamp Duty Land Tax: Overview