More than 35,000 first-time buyers paid stamp duty last year despite claiming relief, with over 1,200 hit with the maximum £10,000 charge, new figures reveal.
Data obtained from HMRC through a Freedom of Information request by smart money app Plum shows that 36,999 first-time buyer relief claimants were still liable for stamp duty in 2024/25 – roughly one in four of all relief claims.
The average bill among those who paid was £4,073. Of those transactions, 24,955 buyers paid £2,000 or more in tax, while 13,529 were charged at least £5,000. A further 1,285 first-time buyers paid the maximum £10,000.
Under the previous rules, purchases above the £425,000 nil-rate band attracted a reduced 5% rate, with relief lost entirely above £625,000. However, from 1 April 2025, the nil-rate threshold was cut to £300,000 and relief scrapped for homes over £500,000 – changes expected to push more first-time buyers into paying tax, particularly in London and the South East.
HATED TAX
Rajan Lakhani, personal finance expert at Plum, says: “Stamp duty has long been one of the most hated taxes there is, but the pain faced by first-time buyers is particularly acute given the financial challenges they already face in raising a deposit.
“These figures make you wonder how many are being shut out of the housing market completely because they simply can’t afford the stamp duty.
“Worse still, the new stamp duty relief thresholds mean tax bills are only going to grow bigger in the years ahead as rising house prices mean more and more first-time buyers lose entitlements to stamp duty relief altogether.”
WISHFUL THINKING
Plum is urging buyers to consider using Lifetime ISAs (LISAs), which offer a 25% government bonus on savings of up to £4,000 per year.
Lakhani adds: “There are growing calls for a blanket stamp duty exemption for first-time buyer transactions, but this is probably wishful thinking given the current state of the government’s finances.
“However, with the right planning, you can indirectly get the government to cover some, if not all, of those costs for you. The 25% bonus made available to Lifetime ISA savers could cover most first-time buyers’ stamp duty bills within a few short years of opening an account.”
