Becoming a first-time buyer is a huge milestone for many people. However, it can also be overwhelming as there are certain phrases you’ll encounter that you’ve never heard of before. One of these will most likely be Stamp Duty. 

But what is it, and how do you know if you qualify for it as a first-time buyer? Continue reading to find out more. 

What Is Stamp Duty?

Believe it or not, Stamp Duty has nothing to do with sending mail. Instead, its full name is Stamp Duty Land Tax in England and Northern Ireland, and it refers to the tax you pay when you purchase property or land. If you live in Scotland, it’s referred to as Land and Buildings Transaction Tax, and in Wales, just Land Transaction Tax. 

Simply put, Stamp Duty is what you’ll pay when you purchase residential property or land costing more than £125,001. It applies to freehold and leasehold properties, and whether you have a mortgage or not. The Stamp Duty £3,550 on an average-priced UK property. (£271,000) for non first time buyers. Source

Stamp Duty operates using a progressive system, so there may be different rates applied to different parts of your property or land. There are calculators available to determine exactly how much Stamp Duty you will pay, but it can range between 2% and 12% of your total property purchase price. The higher your property or land price, the higher the amount of Stamp Duty you will pay. 

However, Stamp Duty works differently for first-time buyers, which we will go into next.

How Stamp Duty Works for First-Time Buyers

If you’re considering purchasing your first home or property, but the thought of Stamp Duty scares you, you might be able to breathe a sigh of relief. This is because the threshold to pay Stamp Duty is much higher. If you live in England or Northern Ireland, you only have to pay these taxes when you spend more than £300,000 on a property or plot of land.

Even when you go over the threshold, you aren’t hit with a high percentage of Stamp Duty. In fact, if you were to spend up to £500,000 on a property, you won’t need to pay tax on the first £300,000. However, it’s not all good news. If you end up spending over £500,000 on your first property, you no longer qualify for first-time buyers’ relief and will therefore have to pay the standard rates of Stamp Duty.

If you want to qualify for this relief, there are certain criteria you need to meet. You are seen as a first-time buyer if you are purchasing your only or main residence AND you have never owned a freehold or have a current leasehold interest in a residential property anywhere in the world. Unfortunately, if you have inherited a property, even if you didn’t purchase it, you will not qualify for this relief. 

If you are purchasing a property or land with someone else, you can still qualify for this relief. However, you both need to meet the first-time buyers’ criteria. 

Here’s the HMRC Calculator if you want additional details; Calculator

Important Deadlines to Know

On your way to purchasing a property or plot of land, and want to ensure you’re paying your Stamp Duty on time? Meeting the deadlines is crucial to ensuring everything goes smoothly. While there are different names for this type of tax across the UK, they tend to have the same rules when it comes to paying it.

To ensure you are meeting deadlines, all Stamp Duty must be paid within 14 days of the completion date of your property purchase. If you don’t pay it in time, you may face interest charges and penalties, meaning you end up paying even more in the end. However, typically, this is handled by your solicitor. 

Past Holiday Periods

There have been times in the past when temporary Stamp Duty holidays have helped stimulate the housing market. While none are predicted to occur in 2025, it’s good to know about them in case they happen again.

For example, from July 2020 to June 2021, the UK government raised the threshold from £125,000 to £500,000. This was helpful, especially after the emergence of COVID-19, meaning many buyers didn’t need to pay any Stamp Duty at all.

Implications for Buyers

As mentioned, there is a chance of financial penalties if you don’t pay your Stamp Duty in time. This is especially the case if you’re looking to buy a property towards the end of the financial year. This is because there are often changes to rates and thresholds around this time.

Common Misunderstandings About Stamp Duty

Unfortunately, even with all the information available out there, there are still a few common misunderstandings buyers have about Stamp Duty. 

All Buyers Pay The Same

Many people believe that everyone pays the same amount of Stamp Duty when purchasing a property or land, for example £1,000. However, this is not true as some buyers don’t need to pay any tax, and others pay different percentages depending on what they spend. 

First-Time Buyers Don’t Need To Pay Stamp Duty

Some people read the words ‘first-time buyer relief’ and immediately assume they don’t have to pay any Stamp Duty. While the threshold is higher than for people who own multiple properties, they still need to pay taxes when spending over £300,000.

Case Example: A First-Time Buyer Timeline

Emma, a first-time buyer in Manchester, agrees to purchase a £250,000 flat. Her offer is accepted on 1 March, and she instructs a solicitor immediately. Since she qualifies for first-time buyer relief, she will only pay stamp duty on the amount above £250,000, in this case, £0.

Her mortgage offer comes through on 15 March, and contracts are exchanged on 20 April. A completion date is set for 1 May.

Although Emma doesn’t owe stamp duty due to the relief, her solicitor is still required to submit a Stamp Duty return within 14 days of completion, by 15 May. 

On 1 May, the sale completes, and her solicitor immediately submits the Stamp Duty return on her behalf.

If Emma or her solicitor had missed the 15 May deadline, she could have faced penalties and interest, even though no tax was due. This highlights how critical the deadline is, not just for payment, but also for filing the return.

Conclusion: Staying Informed and Prepared

Buying a property for the first time can be an exciting part of someone’s life, but it is important to be prepared. By knowing about Stamp Duty, the different reliefs and thresholds, you can ensure you can budget properly and guarantee it is paid in time after purchasing a property. When the tax is paid promptly, you don’t have to worry about any potential fines or interest.

If you are thinking about purchasing a property or plot of land, but the idea of Stamp Duty appears overwhelming, then the experts at Mortgaged can help with guidance. However, we’d always recommend speaking to an accountant or solicitor regarding your stamp duty.

Your home/property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.

There may be a fee for mortgage advice. The precise amount will depend upon your circumstances and will be agreed with you before proceeding, but we estimate it will be £395.

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