The Ultimate Guide to First Time Buyer Stamp Duty

Before we get started on the current rates of stamp duty for first-time buyers, let’s discuss exactly what stamp duty is.

Stamp Duty Land Tax is a tax payable on the purchase price of a property in England and Northern Ireland.

A similar tax is also paid in Scotland and Wales.

However, it has a different name in both countries, being known as Land and Buildings Transaction Tax in Scotland and Land Transaction Tax in Wales.

While the names differ, so do the rates, as each home nation has different rules which we will address in a later section.

Stamp Duty Land Tax or SDLT needs to be paid within 14 days of completing a property sale and needs to be paid by the party purchasing the property.

Ever since 2014, the UK has had a progressive stamp duty rate system.

This means instead of paying one rate on the total purchase price; you will pay differing rates on a certain proportion of the property price.

For example, let’s say you purchase a property for £500,000.

Under the current tax rates as of September 2023, you will pay 0% tax on the first £250,000 (£425,000 if you’re a first-time buyer) while paying 5% on the next £250,000.

In this scenario, you would need to pay £12,500 within 14 days of purchasing your £500,000 property.

It is important to note that tax rates differ for those buying additional properties in the UK that aren’t their primary residences, such as investors or landlords.

Following 2024’s Autumn Budget, investors or landlords will typically have to pay an additional 5% charge on top of the normal SDLT rates. In the example provided, this would mean that the buyer will pay a 5% charge on the first £250,000 rather than 0%, and a 10% charge on the following £250,000.

Disclaimer: The stamp duty holiday has completely ended as of October 1, 2021. Click the link to learn more about the latest rates and what it means for the property market.

As of July 2021, the main stamp duty holiday has ended.

First implemented back in July 2020, the stamp duty holiday was introduced to help promote continued investment into the UK property market during the covid-19 pandemic.

Here, buyers could save up to £15,000 on stamp duty, with the thresholds at which you start paying the tax increasing.

It meant that those buying a home would only pay stamp duty on property worth over £500,000, while investors would need to pay just 3% on properties up to £500,000.

However, while it has officially ended, there are still tax cuts available in England and Northern Ireland until October, although these rates are less generous.

Despite the smaller generosity, stamp duty land tax for first time buyers is still excellent.

Notably, these reduced rates aren’t available in Wales and Scotland, which saw its tax holiday ending in June and April, respectively.

Stamp Duty First Time Buyer UK

The stamp duty threshold for first-time buyers is £425,000, while for others, it is £250,000.

So, on a property purchase worth £350,000, a first-time buyer won’t have to pay stamp duty!

Their effective stamp duty rate is 0.00%.

Those Buying a Main Residence in the UK

While first-time buyers will see no stamp duty tax on a property worth £350,000, the same cannot be said for those buying a main residence in the UK, which isn’t their first home.

In this example, a buyer will not pay stamp duty on the initial £250,000.

However, the buyer will pay 5% on the portion from £250,001 and £350,000.

This means that those buying a main residence will pay an SDLT rate of £5,000

Now that you understand current stamp duty rates and how much to expect to pay, it’s time to address paying stamp duty.

For those buying property in England and Northern Ireland, you will have just 14 days from the date of completion to pay the stamp duty costs.

This means from the date the contracts are signed and the keys are exchanged.

While you can take longer to make the payment, you can face fines and extra interest, so it’s best avoided.

It’s important to note that while your solicitor will likely sort the process for you and tell you to pay, it is your legal responsibility to pay the tax.

Paying stamp duty and its alternatives in Scotland and Wales have different processes.

If you want to learn the full process, read the following three sections.

Paying Stamp Duty in England and Northern Ireland

The process for paying stamp duty is quite simple.

Firstly, you will need access to your unique transaction reference number, which is 11 characters long and found on either the online submission receipt or on the paper stamp duty return.

After this, you can transfer the money online to HM Revenue & Customs or pay using a debit card, cheque, or cash in banks and post offices – the latter will need you to provide a payslip.

For more details on paying stamp duty, check out the official government website.

Paying Land and Buildings Transaction Tax in Scotland

Paying LBTT in Scotland differs from Stamp Duty in England.

The first major difference is you won’t be paying HM Revenue & Customs and will instead pay Revenue Scotland.

Also, unlike England and Northern Ireland, you will have 30 days to pay your tax rather than two weeks.

However, like in England, the process is simple.

First, submit an online return to register the transaction on the Revenue Scotland website.

At the end of the return, you will get a receipt with a 13-character transaction reference number.

Then you will just need to pay the stamp duty, which you can do by phone, online, or via cheque.

Paying Land Transaction Tax in Wales

Once again, the process is almost identical to the other three countries, except payments will go to the Welsh Revenue Authority.

Like Scotland, you will also be given 30 days after completing your purchase to pay the applicable tax.

Firstly, submit a return registering the transaction on the WRA site.

Next, find your unique transaction reference number that will be sent to you after the WRA processes your return.

Then, like the other countries in the UK, you can pay with your phone, online, or via cheque (although this is limited right now due to covid).

For more information, check out the Welsh government website to learn how to pay LTT.