First Time Buyer Stamp Duty Relief – Definition, Overview & FAQ
What is a first time buyer stamp duty relief?
Definition: In the UK, the first-time buyer stamp duty relief is a benefit
introduced to help those purchasing their first property by providing a reduction
in the Stamp Duty Land Tax (SDLT) they need to pay.
The UK government introduced the first-time buyer stamp duty relief in the
November 2017 Budget. It aimed to help first-time buyers by reducing or
eliminating the SDLT on their property purchases.
To qualify, buyers must:
- Be purchasing their first ever property.
- Intend to use it as their main residence.
With this relief:
- First-time buyers don’t pay any stamp duty on properties up to £300,000.
- For properties costing between £300,001 and £500,000, they pay 5% SDLT
on the portion above £300,000.
- Properties above £500,000 don’t receive the relief, and the regular SDLT
The relief must be claimed by the buyer or their solicitor when submitting the SDLT
return to HM Revenue & Customs (HMRC).
This relief has made homeownership more accessible for many by reducing the
upfront costs associated with buying a property.
What is Stamp Duty Land Tax (SDLT)?
Before proceeding, it’s important to note that “stamp duty relief” and “Stamp Duty
Land Tax (SDLT)” are not the same, though they are closely related concepts within
the context of UK property transactions.
Stamp Duty Land Tax (SDLT) is a tax levied on purchasing properties and land in
England and Northern Ireland.
The amount of SDLT paid depends on the property’s price and its use (e.g.,
residential vs. non-residential). Different tax rates apply to different price bands,
and there are also different rates for additional properties.
In essence, SDLT is the tax itself, while stamp duty relief represents specific
situations where the tax might be reduced or eliminated.
Explanation of SDLT
The origin of stamp duty in the UK dates back to 1694, during the reign of William
III and Mary II. Initially introduced as a temporary measure to fund war against
France, it became a permanent fixture due to its revenue-generating capacity. Over
the centuries, its application expanded, touching various legal and financial
By the 20th century, with changing economic scenarios and the growth of the
property market, the focus of stamp duty began to shift primarily towards property
transactions. Recognizing the need to modernize the system, the UK government
transformed the old stamp duty into the Stamp Duty Land Tax (SDLT) in 2003.
This new system was more structured and detailed, specifically targeting land and
property transactions in England and Northern Ireland.
Role in the UK Property Market:
- Revenue Generation: One of the primary roles of SDLT is to generate
revenue for the government. With the property market being a significant
sector in the UK economy, SDLT contributes a substantial amount to the
- Market Regulation: SDLT can act as a tool for the government to control the
property market. By adjusting rates or offering reliefs, the government can
influence buyer behaviour. For example, higher rates for additional properties
were introduced to curb the buy-to-let market and ensure housing
availability for first-time buyers.
- First-time Buyer Support: Recognizing the challenges faced by first-time
buyers in entering the property market, the government introduced SDLT
reliefs. By reducing or waiving SDLT for such buyers, the barrier to entry is
- Regional Development: SDLT policies can be used to encourage investments
in specific areas. For example, areas undergoing regeneration might see
incentives in the form of SDLT reductions to attract buyers.
- Reflecting Market Changes: Over time, SDLT rates and policies have been
adjusted to reflect changing economic conditions. For instance, during
economic downturns or pandemics, temporary reliefs or reductions might be
introduced to stimulate the property market.
Defining a 'First-Time Buyer'
A ‘first-time buyer’ is an individual who has never owned a property or a share
of a property, either in the UK or anywhere else in the world, and is purchasing
their main residence.
Criteria for Being Considered a First-Time Buyer:
- No Prior Ownership: The individual must not have previously owned or held
an interest in a residence, either alone or jointly with others.
- Worldwide Rule: This stipulation isn’t limited to the UK. If an individual has
previously owned property abroad, they wouldn’t qualify as a first-time buyer
in the UK.
- Primary Residence: The property being purchased should be intended as
the individual’s main residence. It should not be a buy-to-let property or a
- Joint Purchases: In cases where a property is being bought jointly, all buyers
must meet the first-time buyer criteria to avail any related benefits or reliefs.
Common Misconceptions Clarified:
- Inherited Properties: Some people think that if they inherit a property, they
can still qualify as a first-time buyer. This is not the case. If you’ve inherited a
property or a share of one, you would not be
- Previous Property Sales: Selling a property doesn’t “reset” your status. If
you’ve owned a property in the past and sold it, you’re not a first-time buyer.
- Shared Ownership: Some believe that participating in shared ownership
schemes doesn’t count as owning property. However, even if you’ve owned a
part of a property through such a scheme, you wouldn’t qualify as a first-time
- Properties Abroad: Owning property outside the UK does impact your
first-time buyer status in the UK. Some mistakenly think international
property ownership is not considered.
Details of the First Time Buyer Stamp Duty Relief
The First Time Buyer Stamp Duty Relief was introduced to support those entering
the property market for the first time, making homeownership more accessible by
reducing the upfront costs.
- Thresholds and Rates:
○ For properties costing up to £300,000, first-time buyers pay no Stamp
Duty Land Tax (SDLT).
○ For properties priced between £300,001 and £500,000, first-time
buyers are exempt from SDLT on the first £300,000 but will pay the
tax on the remaining amount.
○ Properties priced over £500,000 do not qualify for the relief, and
first-time buyers must pay the standard SDLT rates.
- Eligibility Criteria:
○ The buyer must be a genuine first-time buyer, i.e., they’ve never
owned a property or a share of a property in the UK or anywhere else
in the world.
○ The purchased property must be the buyer’s only residence and not a
buy-to-let investment or a second home.
○ For joint buyers, all parties involved must meet the first-time buyer
- Claiming the Relief:
● The SDLT relief for first-time buyers is typically claimed by the solicitor
or agent handling the property purchase on the buyer’s behalf. They
will fill out the SDLT return form indicating that the buyer qualifies for
● If the relief isn’t claimed at the time of purchase but the buyer
believes they qualify, it’s possible to apply for a refund from HM
Revenue and Customs (HMRC) later.
- Duration and Changes:
● Tax benefits and schemes might be subject to changes in the annual
budget announcements. Buyers should always check the latest criteria
and rates before making a purchase.
Comparing SDLT in Different Regions
- England and Northern Ireland SDLT
a. Stamp Duty Land Tax (SDLT) is applied to property purchases in
England and Northern Ireland.
b. The amount of SDLT due varies based on the property price, type
(residential or non-residential), and whether the buyer is an individual,
a first-time buyer, or a company.
c. First-time buyers get relief, paying no SDLT on properties up to
£300,000 and reduced rates on properties costing up to £500,000.
- Scotland: Land and Buildings Transaction Tax (LBTT)
a. Scotland replaced SDLT with its Land and Buildings Transaction Tax
(LBTT) in 2015.
b. Like SDLT, the amount of LBTT due depends on the property’s price,
but the tax bands and rates differ.
c. Scotland also offers a first-time buyer relief, where first-time buyers
pay no LBTT on properties up to £175,000.
- Wales: Land Transaction Tax (LTT)
a. In 2018, Wales introduced its Land Transaction Tax (LTT), replacing
b. LTT rates and bands are distinct from those in England, Northern
Ireland, and Scotland.
c. As of now, there’s no specific first-time buyer relief under LTT, but the
tax bands are structured so that properties at the lower end of the
market (which often include first homes) might incur little or no tax.
If I've inherited a property, do I still qualify for the relief?
No, if you’ve inherited a property, you’re no longer considered a first-time buyer and
won’t qualify for the relief.
Does the relief apply to all types of properties?
The relief primarily applies to residential properties. If the property isn’t intended
for residential use, the relief won’t apply.
Can I benefit from the relief if I'm buying a property with someone else?
Both buyers must meet the first-time buyer criteria. If one party has previously
owned property, neither will qualify for the relief.
Who qualifies as a "first-time buyer"?
A first-time buyer is someone who has never owned or part-owned a residential
property in the UK or abroad.
Can I claim the relief retrospectively if I forgot to claim it at the time of purchase?
Yes, you can make a claim for a refund within a specified timeframe if you were
eligible at the time of purchase but forgot to claim.
How does the relief apply to properties in different price brackets?
In England and Northern Ireland, first-time buyers pay no SDLT on properties up to
£300,000 and reduced rates on properties up to £500,000. Beyond this, standard
How do I claim the First Time Buyer Stamp Duty Relief?
The relief is claimed when submitting the SDLT return, which is typically done by
your solicitor or conveyancer on your behalf.
Is the relief available in Scotland and Wales?
Scotland has its own first-time buyer relief under LBTT for properties up to
£175,000. Wales doesn’t have a specific first-time buyer relief for LTT, but its tax
bands can benefit lower-priced properties.