First-Time Buyer or Not? The Stamp Duty Rules Everyone Gets Wrong

The government’s First-Time Buyer Stamp Duty relief is one of the most valuable tax breaks available to property buyers in England and Northern Ireland. It can save you thousands - but only if you qualify.

The problem? The rules are not always as clear as they seem. Many buyers assume they’re eligible when they’re not, and others miss out because they don’t realise relief is available.

Here’s a breakdown of the scenarios that catch people out most often.

What Is First-Time Buyer Relief?

First-Time Buyer Relief (FTBR) reduces or removes the Stamp Duty Land Tax (SDLT) you pay when buying your first residential property.

• No SDLT is due on the first £300,000 of the purchase price.
• 5% SDLT is payable on the portion between £300,001 and £500,000.
• If the property costs more than £500,000, the relief doesn’t apply at all.

It sounds simple - but in reality, things get complicated quickly.

Scenario 1: Joint Purchases

If you’re buying with someone else, everyone involved must be a first-time buyer for relief to apply.

• Example: If you’re a first-time buyer but your partner already owns a flat, you won’t qualify.
• Even if the other owner only has a small share in a property elsewhere, relief is lost.

This rule catches out many couples and family buyers.

Scenario 2: Inherited Property

If you’ve inherited property before, you may not count as a first-time buyer.

• Owning even a small inherited share (say 25% of a parent’s house) is enough to disqualify you.
• It doesn’t matter if you never lived there - what matters is whether your name has appeared on the legal title.

Scenario 3: Gifted Deposits

Getting a deposit gifted by parents or relatives does not affect your status. Relief depends only on whether you’ve previously owned property -not how you fund the purchase.

But here’s the twist: if the person gifting you the money wants to be on the deeds too, and they’ve owned property before, you’ll lose the relief.

Scenario 4: Overseas Ownership

If you’ve ever owned property abroad, you won’t qualify as a first-time buyer in the UK.

It doesn’t matter if you only owned a small share, or if it was years ago - global ownership is taken into account.

Scenario 5: Replacing a Main Residence

Sometimes people confuse first-time buyer relief with the rules about the 3% additional property surcharge.

• If you already own a property but are replacing your main residence, you may avoid the 3% surcharge.
• But you still won’t count as a first-time buyer.

The two rules are separate, and it’s easy to mix them up.

Why This Matters

Getting this wrong can be expensive. Over claiming relief may result in HMRC demanding repayment (with interest and penalties). Underclaiming means you could miss out on thousands in savings.

That’s why it’s worth having your SDLT position reviewed by a specialist before completion.

How SCA Tax Can Help

At SCA Tax, SDLT is our sole focus. We:

• Review your purchase before completion to confirm whether you qualify.
• Make sure reliefs like First-Time Buyer Relief are applied correctly.
• Help secure refunds if you’ve already overpaid.

Buying your first home should be exciting - not a tax headache. We’ll help make sure you don’t pay more than you should.

First-Time Buyer Relief FAQs

Does a gifted deposit affect First-Time Buyer Relief?
No. How you fund your purchase (whether through savings, a mortgage, or a gifted deposit) doesn’t impact your eligibility. What matters is whether you’ve previously owned property.

What if my partner has owned a property before but I haven’t?
Unfortunately, if you’re buying jointly, both of you must be first-time buyers. If just one person has owned property before, the relief cannot be claimed.

Can I claim First-Time Buyer Relief if I inherited property?
No. If you’ve ever been named on the title deeds of an inherited property, even partially, you won’t qualify as a first-time buyer.

Does overseas property ownership matter?
Yes. If you’ve owned property abroad, you’re not considered a first-time buyer in the UK. The rule applies worldwide.

What happens if my property costs more than £500,000?
If the purchase price is above £500,000, the relief does not apply at all. You’ll pay SDLT at the standard residential rates.

What’s the difference between First-Time Buyer Relief and the 3% surcharge exemption?
They’re separate rules. First-Time Buyer Relief reduces SDLT for eligible buyers purchasing under £500,000. The 3% surcharge exemption applies when you’re replacing your main residence - even if you’ve owned property before.