Your Guide to Stamp Duty Changes for First-Time Buyers

SDLT is a tax payable on the purchase of property or land in the UK. The amount you pay depends on the property’s value and use. Currently, buyers of homes worth less than £250,000 don't pay stamp duty, which was doubled from £125,000 in 2022. Unfortunately, this is about to be reverted, making many feel a sense of urgency to buy before it sets in.

For first-time buyers, the thresholds at which you start paying Stamp Duty are changing:

• Reduced nil-rate band: Currently, you don't pay Stamp Duty on the first £425,000 of a property's value, but this will reduce to £300,000 from April 2025.

• Increased tax band: The 5% tax band, currently applicable to properties between £425,000 and £625,000, will be reduced to £500,000.

These changes mean that first-time buyers will pay significantly more Stamp Duty on properties above £300,000. For instance:

• Buying a £425,000 property after April 2025 will incur an additional £6,250 in Stamp Duty.

• Buying a £625,000 property will cost an extra £11,250.

Therefore, if you're considering buying a property and meet the criteria for first-time buyer relief, it's advisable to act before April 2025 to take advantage of the current, more favourable rates.

Given these changes, first-time buyers should consider the following to maximise savings and ensure a smooth homebuying process:

Act quickly: Taking advantage of the current lower rates and buying a property before the changes come into effect can save significant costs. 

Seek financial guidance: Consulting with a financial advisor or conveyancer can help you understand the implications of the changes and explore potential strategies to minimise costs. 

Consider a longer-term view: While the changes may make buying a property more expensive in the short term, it's important to consider the long-term benefits of homeownership, such as building equity and having a stable place to live. 

If buying a property isn’t feasible, exploring other options like renting or investing in other assets can be worthwhile.

What is Stamp Duty Land Tax (SDLT)? SDLT is a tax payable on the purchase of property or land in the UK. The amount you pay depends on the property’s value.

How is SDLT calculated? SDLT is calculated based on the property’s purchase price and the applicable tax bands.

When is SDLT due? SDLT is typically due on the completion date of the property purchase.

Who is responsible for paying SDLT? The buyer is usually responsible for paying SDLT.

Are there any exemptions or reliefs from SDLT? Yes, there are various exemptions and reliefs, including First-Time Buyer Relief and relief for certain types of properties.

Am I eligible for first-time buyer relief? To be eligible for first-time buyer relief, you must not have owned a property in the UK or abroad.

How much can I save with first-time buyer relief? The amount you can save depends on the property’s price and the specific relief available.

What are the income limits for first-time buyer relief? There are no specific income limits for first-time buyer relief.

Do any developer incentives reduce SDLT costs? Some developers offer incentives to reduce SDLT costs for buyers.

How can I estimate my SDLT liability? You can use online SDLT calculators to estimate your potential liability.

What happens if I make a mistake on my SDLT return? If you make a mistake on your SDLT return, you may be liable for penalties and interest.

Can I get a refund of SDLT? In certain circumstances, you may be eligible for a refund of SDLT.