Stamp Duty Exemption: First-Time Buyer, Charity, and Gift Reliefs

A stamp duty exemption removes the Stamp Duty Land Tax charge entirely on certain property transfers in England and Northern Ireland. The clearest cases are transfers between spouses on divorce, property inherited under a will, and outright gifts where no money or debt changes hands. First-time buyers pay nothing on the first £300,000 of a home costing up to £500,000, and any residential purchase priced at £125,000 or less falls within the standard zero-rate band.¹

Purchases That Fall Below the Tax

Every residential purchase has a zero-rate band built in. As of April 2025, the first £125,000 of the price carries no SDLT, so a buyer paying £125,000 or less for a home owes nothing.¹ The calculation framework sits in Section 55 of the Finance Act 2003.²

For non-residential and mixed-use property, the zero-rate band covers the first £150,000. Going even £1 over the threshold triggers tax on the excess.

First-Time Buyer Relief

If you have never owned a home anywhere in the world, first-time buyer relief under Schedule 6ZA of the Finance Act 2003 removes tax on the first £300,000 of the price and charges 5% only on the portion between £300,001 and £500,000.¹ On a £400,000 purchase, that is £1,250 less than a buyer would pay under the standard bands.

The relief has a hard ceiling. If the property costs more than £500,000, even by a pound, you lose the relief entirely and pay standard rates on the whole price.³

The definition of “first-time buyer” is strict. You must never have owned a major interest in a dwelling, whether freehold or a lease of 21 years or more, anywhere in the UK or abroad.³ Inherited property counts against you. A prior share held through a trust arrangement usually disqualifies you. The property must be one you intend to live in as your main residence, not a buy-to-let or second home.

Where two people buy together, both must individually qualify. If one partner has owned property before, neither can claim the relief on the joint purchase.³

Transfers Fully Exempt From SDLT

Some property transfers owe no SDLT regardless of value. These are genuine exemptions written into Schedule 3 of the Finance Act 2003, not situations where the price happens to fall below a threshold.

Divorce and Civil Partnership Dissolution

Property transferred between spouses on divorce, annulment, or judicial separation is exempt. This covers transfers made under a court order and transfers made under an agreement between the parties in connection with the separation.⁴ The same rules apply to civil partnerships being dissolved under a court order or by agreement between the partners.

Inheritance and Deeds of Variation

Property left to you in a will is almost always exempt from SDLT, including property that comes to you with an outstanding mortgage. The exemption also covers deeds of variation, where beneficiaries agree to redistribute the estate differently from the will. The variation must be made within two years of the death, and the new beneficiary cannot pay money or other consideration in exchange for receiving the property.⁴ If money does change hands between beneficiaries, SDLT becomes chargeable on that amount.

Gifts With No Consideration

You can transfer property as a pure gift without triggering SDLT, provided no money, debt assumption, or other payment passes between the parties.⁵ A parent giving a home to an adult child, with no mortgage being taken over, is the classic example. The moment the recipient takes on a mortgage or pays anything in return, SDLT applies to whatever value is exchanged.

Charity Relief

A charity buying property for qualifying charitable purposes can claim full relief from SDLT. The charity must intend to hold the property for those purposes, and the transaction cannot be arranged to give a tax advantage to a non-charitable party.⁶

Transactions That Do Not Need a Return

An exempt transfer usually does not require any paperwork with HMRC. No SDLT return is needed for:

Pure gifts where no money or other consideration changes hands.
Property inherited under a will, including property that carries mortgage debt, as long as the beneficiary is not paying compensation to other beneficiaries.
Transfers between separating spouses or civil partners under a court order or agreement.
Freehold purchases under £40,000 that are not linked to other transactions.

Every other transaction needs a return within 14 days of completion, even when the price falls inside the zero-rate band and no tax is due.⁷ Buying a £120,000 flat as your only home produces a nil tax bill, but HMRC still expects the return.

How to Claim an Exemption or Relief

Your solicitor or conveyancer normally files the SDLT return electronically through HMRC’s portal as part of the purchase. You can also file yourself online if you are not using a solicitor.⁷

A relief is claimed by entering the correct relief code on the return. Common codes include:

32 for first-time buyer relief
22 for Right to Buy purchases
23 for registered social housing providers
20 for charities⁶

Enter the wrong code, or leave it blank, and HMRC calculates the tax at standard rates. Fixing that afterwards takes time.

The 14-day deadline runs from the effective date of the transaction, usually completion. Once HMRC processes the return, it issues an SDLT5 certificate, which your solicitor needs to register the purchase with the Land Registry. Missing the deadline attracts a flat £100 penalty, rising to £200 if the return is more than three months late, and a tax-based penalty after 12 months that can equal the full tax due.⁷ The fixed penalties apply even where no tax was owed.

What the Exemptions Do Not Cover

Exemptions and reliefs sit alongside two surcharges that catch buyers who might otherwise assume they owe little or nothing.

If you already own residential property and buy another, the additional-property rates add 5 percentage points to every band from April 2025 onwards. The normally tax-free first £125,000 is taxed at 5%, the next slice at 7%, and so on.⁸ Selling or giving away your previous main home before, or on the same day as, completing the new purchase avoids the surcharge. Buying a new main home before the old one sells means paying the surcharge upfront and reclaiming it once the old sale completes, provided that happens within three years. Properties worth under £40,000, mixed-use buildings, transfers between spouses, and leases of seven years or less also sit outside the surcharge.

Buyers who are not UK residents pay an extra 2 percentage points on top of standard rates on residential property in England and Northern Ireland, even if the home will be their only residence. The non-resident surcharge stacks with the additional-property surcharge, and it does not apply to non-residential or mixed-use purchases, property under £40,000, or leases of seven years or less.⁹

1
GOV.UK. Stamp Duty Land Tax – Residential Property Rates
2
Legislation.gov.uk. Finance Act 2003 – Section 55
3
Legislation.gov.uk. Finance Act 2003 – Schedule 6ZA
4
Legislation.gov.uk. Finance Act 2003 – Schedule 3
5
GOV.UK. Stamp Duty Land Tax – Transactions That Do Not Need a Return
6
GOV.UK. Stamp Duty Land Tax Relief for Land or Property Transactions
7
GOV.UK. Stamp Duty Land Tax Online and Paper Returns
8
GOV.UK. Higher Rates of Stamp Duty Land Tax
9
GOV.UK. Rates of Stamp Duty Land Tax for Non-UK Residents