Stamp Duty Land Tax (SDLT) is a tax that must be paid when purchasing a property in the UK.
For many first-time buyers, understanding the intricacies of stamp duty can be a daunting task, especially with changes to the rates of Stamp Duty recently coming into effect.
Stamp duty for first time buyers
As of 23rd September 2022, first-time buyers in the UK have seen significant changes to the stamp duty rates.
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Currently, first-time buyers are exempt from paying stamp duty on the first £425,000 of any property purchase and will pay 5% for anything over this £425,000 amount.
Here is this how this will look on the purchase of a £500,000 property.
| Property Value Portion | Stamp Duty Rate | Calculation | Stamp Duty Amount |
|---|---|---|---|
| ≤ £425,000 | 0% | £425,000 × 0% | £0 |
| £425,001 – £500,000 | 5% | (£500,000 – £425,000) × 5% | £3,750 |
| Total Stamp Duty Due | £3,750 |
The breakdown of SDLT for a first time buyer in this example:
- £0 on the first £425,000 of the property value
- 5% on the remaining £75,000 (£500,000 – £425,000), which equals £3,750
Therefore, the total stamp duty owed by a first-time buyer for a £500,000 property purchase would be £3,750.
Stamp duty for first time buyer non-UK residents
In cases where a transaction is designated as a ‘non-resident transaction’, an additional 2% surcharge is levied atop existing residential rates of Stamp Duty Land Tax (SDLT).
These rates include those applied to zero rates, as well as rates applicable to all buyer categories, including first-time buyers. So the SDLT rates for non-UK residents then become:
| Property Value Portion | Stamp Duty Rate |
|---|---|
| ≤ £425,000 | 2% |
| £425,001 – £500,000 | 7% |
If you are a first-time buyer purchasing a property worth £425,000 or less, you will not need to pay any stamp duty.
Who pays Stamp duty?
Stamp Duty Land Tax (SDLT) is a tax that must be paid when purchasing a property in the UK by the buyer.
The amount of stamp duty owed can be confusing, as the rates vary depending on the type of buyer, the purchase price of the property, and the date of the transaction.
In this article, we will focus on the current stamp duty rates for first-time buyers, taking into account the recent changes that came into effect on 23rd September 2022.
How to calculate the stamp duty you owe
Calculating the stamp duty you owe on a property purchase is a crucial step in the home-buying process.
It’s essential to determine the amount of stamp duty you’ll need to pay early on, as this will help you budget for the total costs associated with your purchase. Here’s a step-by-step guide on how to calculate your stamp duty:
- Determine the purchase price of the property.
- Identify your buyer status (e.g., first-time buyer, moving from first home, buy-to-let investor, or second homeowner).
- Refer to the current stamp duty rates for your buyer status and the purchase price of the property.
- Calculate the stamp duty owed for each portion of the property value according to the corresponding tax rate.
- Sum up the stamp duty amounts for each portion to determine the total stamp duty owed.
It’s advisable to calculate your stamp duty as soon as you have a clear idea of your budget and the type of property you want to purchase. This will help you factor in the additional costs and avoid any surprises later in the process.
How first time buyer SDLT compares to other stamp duty rates
In addition to the rates for first-time buyers, it’s essential to understand the stamp duty rates for other types of property purchases so you understand how beneficial these first time buyer Stamp Duty rates actually are.
How SDLT for first time buyers compares to those buying a second home
The current stamp duty rates for buyers moving from their first home and keeping ownership of their first home or buying a buy to let are:
| Property Value | Second home SDLT | First time buyers |
|---|---|---|
| £0 – £250,000 | 0% | 0% |
| £250,001 – £925,000 | 5% | 5% (After £425,000) |
| £925,001 – £1.5 million | 10% | 5% |
| Above £1.5 million | 12% on remaining amount | 5% |
How SDLT compares to those buying a Buy to Let
Buy-to-let investors and second homeowners are subject to different stamp duty rates compared to those purchasing a primary residence. Since April 2016, these buyers have been required to pay an additional 3% stamp duty surcharge on top of the standard rates.
| Property Value | Stamp Duty Rate | First time buyers |
|---|---|---|
| £0 – £250,000 | 3% | 0% |
| £250,001 – £925,000 | 8% | 5% (After £425,000) |
| £925,001 – £1.5 million | 13% | 5% |
| Above £1.5 million | 15% on remaining amount | 5% |
Stamp duty on land and freehold purchases compared to first time buyer purchases
These rates correspond to the Stamp Duty Land Tax (SDLT) levied on freehold sales and land transactions. These rates are also fairly low compared to other types of SDLT.
| Property Value or Lease Premium | SDLT Rate | First time buyers |
|---|---|---|
| Up to £150,000 | 0% | 0% |
| The next £100,000 (portion from £150,001 to £250,000) | 2% | 0% |
| The remaining amount (portion above £250,000) | 5% | 5% (After £425,000) |
Stamp duty for those replacing their first and only primary residence
As of 23rd September 2022, buyers replacing their primary residence will pay the same stamp duty rates as first-time buyers.
This means that there is no difference in the amount of stamp duty owed, regardless of whether you are a first-time buyer or moving from your first home.
Why is first time buyer stamp duty lower than other types of purchases?
First-time buyers in the UK benefit from more favourable stamp duty rates compared to other types of property buyers.
The government has historically recognised the challenges faced by first-time buyers entering the property market and has implemented measures to help alleviate some of the financial burdens associated with purchasing a first home.
In the past, stamp duty exemptions and discounts for first-time buyers have varied.
In contrast, those moving from their first home, buy-to-let investors, and second homeowners do not receive the same level of support. These buyers are expected to have more financial stability and are therefore subject to higher stamp duty rates.
The additional 3% surcharge on second homes and buy-to-let properties, introduced in April 2016, further demonstrates the government’s intention to prioritise first-time buyers and discourage the acquisition of multiple properties.
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Frequently asked questions
Stamp Duty Land Tax (SDLT) is a tax that must be paid when purchasing a property in the UK. The amount of SDLT owed varies depending on the property’s value, the buyer’s status, and other factors.
Yes, non-UK residents face an additional 2% surcharge on top of the standard SDLT rates. This applies to all residential transactions, including those for first-time buyers.
The government provides lower SDLT rates for first-time buyers to help ease the financial burden of purchasing a first home and to support entry into the property market.
The SDLT rates for land and freehold purchases are similar to those for first-time buyers but can vary depending on the value and specific circumstances of the transaction.
Last Updated on September 30, 2026