Want to save thousands of pounds in stamp duty buying your first home, but not sure if you’ll meet the criteria? Find what you need to know here.

Since 2017, stamp duty has been waived for first-time buyers on the first £300,000 cost of all residential homes worth up to £500,000. 

This means that first-time buyers...

  • ...pay zero stamp duty on homes worth up to £300,000
  • ...pay 5% on homes costing between £300,001 and £500,00 – but only on that slice of the purchase price
  • ...pay regular stamp duty on homes costing more than £500,000. On a £600,000 home for example, you would pay 2% on the slice between £125,000 and £250,000 and 5% on slice between £250,000 and £925,000, totalling £20,000.

But how does the Government define a first-time buyer and what else does it take to qualify for the tax perk?

Here's a round-up of what you need to know.

Q. What's the definition of a first-time buyer?

A.  Someone who has never owned a property or any share of one – whether bought, gifted or inherited – at any time during their life, either inside or outside of the UK.

In addition, you will need to live in the home you are buying as your only residence – and not be planning to rent it out.

Q. What if the person I am buying with isn't a first-time buyer?

A. As the perk is strictly limited to first-time buyers, all purchasers of the home must meet the criteria set out above. If one of you doesn't, then standard stamp duty rates will apply.

Q. Does the break apply to purchases all over the UK?

A. It only applies in England and Northern Ireland.

This is because in Wales and Scotland stamp duty has been devolved (it was replaced in Land Transaction Tax in Wales in April 2018 and by Land and Buildings Transaction Tax in Scotland in April 2015.)

Northern Ireland offers the same tiered stamp duty system as England.

Q. Does it apply to leasehold property?

A. Yes. The waiver applies to both freehold and leasehold homes so long as the lease has 21 years or more to run. 

Q. What if I am buying a further share of my first property? 

A.  If you have a current interest in a home, you'll typically no longer be classified as a first-time buyer. This means any further shares you want to buy of it will be subject to standard stamp duty rates.

There are exceptions which you can read more about with Zoopla stamp duty expert John Shallcross' article.

Q. What if I am using Help to Buy?

A. Yes. So long as you meet the criteria of a first-time buyer, you'll be eligible for the stamp duty break when purchasing under the Government's Help to Buy scheme.

Q. What if I am buying with a shared ownership? 

A. Yes. Whether you opt to pay the stamp duty upfront or in stages, first-time buyers of shared ownership homes worth under £500,000 will be entitled to the full stamp duty relief. This has been applied retrospectively since October 2018, so some existing buyers may qualify for a refund.

Q. I'm definitely a first-time buyer. How do I check what stamp duty I should pay?

A.  This calculator from HMRC should do the trick.

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