First-time buyers will pay zero stamp duty on the first £300,000 of any home that costs up to £500,000 with immediate effect, the Chancellor announced in today's Autumn Budget. This means on a home worth less than £300,000, you'll pay no stamp duty.

The Treasury estimates the move, which has applied from 12.01am today, will take 80% of first-time buyers out of paying stamp duty altogether. We've worked out it'll save the average first-time buyer purchasing a £210,000 property some £1,640 in stamp duty.

The changes apply to purchases by first-time buyers in England, Wales and Northern Ireland – there's no change for buyers in Scotland.

For more information on stamp duty, including an updated calculator for first-time buyers, see our Stamp Duty guide. Plus if you're thinking of buying soon, see our First-Time Buyers' Mortgage Guide.

What is stamp duty?

Stamp duty land tax is a lump-sum tax that anyone buying a property or land costing more than a set amount has to pay. The rate at which you'll pay the tax varies based on the property price.

So what's the new system for first-time buyers?

In England, Wales and Northern Ireland, the new stamp duty rates for first-time buyers buying properties costing up to £500,000 are as follows:

  • Up to £300,000 purchase price: 0% stamp duty
  • £300,000.01 to £500,000: 5% (on that portion of the purchase price only)

If you buy a first home costing more than £500,000, you won't benefit from any change and will be buying under the standard system, which applies to non first-time buyers too (see below for these rates in full).

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Who counts as a first-time buyer?

Anyone who hasn't owned a property before anywhere in the world, whether bought or inherited.

You also won't qualify for the discounted rates if you're buying to let – even if it's your first purchase. The property you're buying needs to be used as your main residence.

I'm a first-time buyer but I'm buying with someone who isn't. Do we get the lower rates?

If you're a first-time buyer jointly purchasing a home with a non first-time buyer, sadly you WON'T qualify for the first-time buyer rates. You both need to be first-time buyers.

I've exchanged but not yet completed. When does this come into effect?

It's actually already in effect, as of 12.01am on 22 November 2017.

The requirement to pay stamp duty is triggered when you complete the purchase of the property. So if you've exchanged prior to 22 November but not completed, you'll be charged under the new first-time buyer stamp duty system.

How much will first-time buyers save?

The maximum stamp duty saving that you can make under the new system, compared with standard rates, is £5,000. You'll make this saving if you're buying a property costing between £300,000 and £500,000.

However, the Office for Budget Responsibility has warned that this measure is actually likely to increase property prices, which could ultimately wipe out any gain from lower stamp duty payments.

'This won't fundamentally change the housing market'

Guy Anker, managing editor of MoneySavingExpert.com, said: "This could benefit lots of first-time buyers, but it's unlikely to significantly affect whether someone can afford to buy their first home, as the key barrier in many regions is high house prices.

"The average first-time buyer pays around £210,000 for their first home, which means they'll save £1,640 on stamp duty under this new system.

"That's clearly a step in the right direction but it won't fundamentally change the housing market, especially if it leads to higher house prices."

I'm a first-time buyer spending £500,000+. How much will I pay?

If you're a first-time buyer purchasing a property for more than £500,000, you'll pay under the standard stamp duty system which also applies to those who AREN'T first-time buyers.

If you're buying a higher value property you'll pay a different rate for different proportions of the property's price and they'll all add together to give the final stamp duty you pay. This works as follows:

  • Up to £125,000 purchase price: 0% stamp duty
  • £125,000.01 to £250,000: 2% (on that portion of the purchase price)
  • £250,000.01 to £925,000: 5% (on that portion of the purchase price)
  • £925,000.01 to £1,500,000: 10% (on that portion of the purchase price)
  • £1,500,000.01+: 12% (on that portion of the purchase price)

For example, if you're buying a property costing £670,000, you'll pay £23,500 in stamp duty, made up of 2% of the portion of the property costing £125,000 to £250,000 (ie, £2,500) and 5% of the portion from £250,000.01 to £670,000 (ie, £21,000).

I live in Scotland. Are there any changes for me?

No – the Scottish Government has said there'll be no changes to the land and buildings transaction tax system (the name given to stamp duty in Scotland).

Scotland Finance Secretary Derek Mackay said: "Analysis from the Office for Budget Responsibility, the UK Government's own independent forecaster, shows that the UK's stamp duty change will simply feed through to higher house prices and will benefit those who already own property, not the first-time buyers."

Stamp duty in Scotland is paid according to the following bands (again, if you're buying a higher-value property, you'll pay a different rate for different proportions of the property's price, and they'll all add together to give the final amount you pay):

  • Up to £145,000 purchase price: 0% stamp duty
  • £145,000.01 to £250,000: 2% (on that portion of the purchase price)
  • £250,000.01 to £325,000: 5% (on that portion of the purchase price)
  • £325,000.01 to £750,000: 10% (on that portion of the purchase price)
  • £750,000.01+: 12% (on that portion of the purchase price)

Stamp duty changes explained – watch the video

Watch MoneySavingExpert.com chief product analyst Helen Saxon give a quick overview of the changes below...

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