Newly released HMRC data shows thousands of first-time buyers are still paying substantial stamp duty bills even when claiming relief, with more than 1,200 charged the maximum £10,000 in 2024/25.

More than 35,000 first-time buyers were liable for stamp duty in the 2024/25 tax year despite qualifying for relief, according to data obtained from HM Revenue & Customs through a Freedom of Information request by smart money app Plum.

The figures show that 36,999 transactions benefiting from first-time buyer relief were subject to stamp duty – around one in four of all relief claims.

The average stamp duty paid by relief claimants with a liable transaction was £4,073. Of those, 24,955 paid £2,000 or more, while 13,529 faced bills of at least £5,000.

At the top end, 1,285 first-time buyers paid the maximum £10,000 in stamp duty.

BREAKDOWN OF TAX BILLS

The data reveals 5,712 relief claimants paid between £1 and £999, while 6,332 paid between £1,000 and £1,999.

A further 4,447 paid between £2,000 and £2,999, and 4,051 paid between £3,000 and £3,999. Some 2,928 buyers were charged between £4,000 and £4,999.

Higher up the scale, 3,170 first-time buyers paid between £5,000 and £5,999, 2,655 paid between £6,000 and £6,999, and 2,323 between £7,000 and £7,999.

Another 2,260 were charged between £8,000 and £8,999, while 1,836 paid between £9,000 and £9,999.

The data relates to first-time buyers qualifying for relief in 2024/25. Under the rules in force at the time, purchases above the nil rate band of £425,000 were subject to a reduced 5% rate, with standard rates applying to homes priced above £625,000.

However, from April 1 2025, the nil-rate threshold was cut from £425,000 to £300,000, with relief removed entirely for properties valued above £500,000.

These changes are expected to increase the number of first-time buyers paying stamp duty, particularly in London and the South East, where higher average property values mean more transactions breach the revised thresholds.

Rajan Lakhani, personal finance spokesperson at Plum, said: “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.”

LIFETIME ISAs IN FOCUS

Plum is urging first-time buyers to consider using Lifetime ISAs as a way of offsetting some of the cost.

Lifetime ISAs allow savers to invest up to £4,000 each tax year and receive a 25% government bonus, worth up to £1,000 annually until the age of 50.

According to the latest annual figures for 2023/24, around 56,900 account holders withdrew from a Lifetime ISA to purchase a first-time property, up by around 1,150 on the previous tax year.

Lakhani said: “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.

“For example, there were 12,000 first-time buyer transactions last year where relief claimants had stamp duty of less than £2,000. That could have been covered with the free money that comes from two years of maxing out the annual LISA allowance.

“Remember, even a boost of a few hundred pounds can be a major help for a young couple already grappling with the cost of a home survey, or their removal fees.

“The LISA product remains open for new applicants, with the government expected not to introduce a new housebuying ISA until 2028. But based on similar changes in the past, people who have opened a LISA should still be able to take advantage and earn the bonus.”