What is Stamp Duty? A Handy Guide for First-time Buyers

Starting April 1, 2025, the UK Government will be changing the Stamp Duty Land Tax rules. According to a recent article from The Standard:

“Homebuyers in the most expensive areas of England and Northern Ireland — in particular London and the South East — will be most impacted by the lowering of thresholds. London first-time buyers, for instance, will pay an extra £6,250 in stamp duty tax on a £425,000 home.”

So, whilst Stamp Duty may be a necessary part of buying a home for most, it can often catch first-time buyers off guard. And with these upcoming changes, here’s what every first-time buyer should know.

What is Stamp Duty?

Stamp Duty Land Tax (SDLT) is a tax charged by the UK Government when you buy property or land in England and Northern Ireland.

The amount you pay depends on the value of the property. The more expensive it is, the higher the Stamp Duty you will need to pay.

For Lifetime ISA First-time buyers

When you're considering buying your first home, it's important to budget for Stamp Duty. If you plan to use your Lifetime ISA (LISA) for your purchase, remember all LISA funds must go toward the house price. This means you will need extra savings for paying for Stamp Duty.

Does everyone have to pay Stamp Duty?

A few factors will determine if a first-time buyer needs to pay, and what rate you will need to pay. These include:

The price of the property
If you are purchasing as a couple (are both of you first-time buyers)
If you are eligible for relief or an exemption*
If you are a UK resident
If you are buying a home in England or Northern Ireland (Different taxes apply in Wales and Scotland).

*Your eligibility for first-time buyers relief depends on various factors; we recommend confirming these with your solicitor.

How do I calculate Stamp Duty for first-time buyers?

There are plenty of Stamp Duty calculators available online, including stampdutycalculator.org.uk or one from Rightmove. Alternatively, you can access information direct from gov.uk.

Understanding ‘stamp duty thresholds’

A threshold is the property price at which a specific tax rate starts to apply. In recent years first-time buyers have benefited from a higher threshold than other home buyers.

However, as of 1 April, the first-time buyer’s threshold will be reduced from £425,000 to £300,000.

This means, for properties priced between £300,001 and £500,000, a 5% SDLT will apply to the portion above £300,000.

Stamp Duty Calculator

To qualify for relief as a first-time buyer, your property must cost less than £500,000, starting in April 2025 (previous limit of £625,000). For properties over £500,000, standard rates of SDLT will apply.

Below, we compare how much you might pay before and after 1 April for a range of property prices*:

Property Price	Stamp Duty Rate (Up to 31 March 2025)	Stamp Duty Rate (After 1^st April 2025)
£300,000	£0	£0
£350,000	£0	£2,500
£400,000	£0	£5,000
£450,000**	£1,250	£7,500
£500,000	£3,750	£10,000

*Please confirm with your solicitor how much tax you will need to pay. They can also confirm if you qualify for the discounted rate.

**If you plan to use a Lifetime ISA to buy a property, remember that your property must cost less than £450,000 (according to current HMRC regulations).

When do I need to pay Stamp Duty?

You will need to pay Stamp Duty within 14 days of completion on your new home; your solicitor or conveyancer will likely handle this for you. They should complete the relevant paperwork and make payment to HMRC.

Our Top Tips for First-time Buyers Navigating SDLT Changes:

Act now: If you're close to purchasing, consider completing before April 1, 2025. That way, you can benefit from the current rates.
Stay informed: Consult with a qualified solicitor to understand how SDLT changes affect your specific situation.
Financial planning: You'll need to account for potential increases when budgeting for your home purchase.

How do I start saving for Stamp Duty?

How much you need to save for your new home will vary widely. You will need to consider legal fees, house surveys, estate agent rate and more. With the above developments, first-time buyers could now see a big change to how much they need to save.

Start your journey today, and get saving for your first home with our range of financial products*. If you have any questions about our products and how they might help you save, get in touch.

*Terms and conditions apply