Buying your first home — UK tax & deposit guide

Q: What are the 2025/26 Stamp Duty first-time buyer thresholds?

From 1 April 2025 SDLT first-time buyer relief reverted to the pre-2022 thresholds: 0% on the first £300,000 and 5% on the portion between £300,000 and £500,000. Property price above £500,000 gets no first-time buyer relief at all — the buyer pays standard rates on the whole purchase, meaning a £505,000 home costs roughly £15,000 MORE in SDLT than a £500,000 home. England and Northern Ireland only — Scotland uses LBTT, Wales uses LTT.

Q: What happened to the Help to Buy ISA?

The Help to Buy ISA closed to new applicants on 30 November 2019, but anyone who opened one before that can keep contributing until 30 November 2029 and claim the bonus until 30 November 2030. It pays a 25% bonus up to £3,000 on £12,000 of savings, with a property cap of £250,000 (£450,000 London). You cannot hold both a Help to Buy ISA AND a LISA and use bonuses from both for the same property — you must pick one. For most savers the LISA is the better vehicle because the bonus cap (£1,000/year) compounds longer.

Six stops every UK first-time buyer should know — LISA bonus, SDLT first-time buyer relief (reverted on 1 April 2025), Help to Buy ISA legacy, shared-ownership SDLT elections, First Homes scheme, and ISA deposit strategy. Each links to the calculator that does the maths.

The six stops

Lifetime ISA (LISA) → Stamp Duty (SDLT) — first-time buyer relief → Help to Buy ISA (legacy) → Shared Ownership → First Homes scheme (England) → Cash ISA + mortgage deposit strategy →

Lifetime ISA (LISA)

£4,000/year deposits + 25% government bonus. Up to £33,000 of bonus over your lifetime. Unlocks for first homes ≤£450k.

Annual contribution cap

£4,000

Government bonus

25% (max £1,000/yr)

Opening age window

18–39

Contribute until

Age 50

Property cap

£450,000 (UK-wide)

Min holding period

12 months before purchase

Tax note: Non-qualifying withdrawal penalty is 25% of the withdrawn amount, NOT 25% of the bonus — it actually returns you less than you contributed (a £5,000 balance gives £3,750 after penalty, £250 less than your £4,000 principal). The £450,000 property cap is UK-wide and was set in 2017 — London first-time buyers often exceed it by the time they're ready to transact.

Lifetime ISA calculator →

Stamp Duty (SDLT) — first-time buyer relief

From 1 Apr 2025: 0% on first £300k, 5% on £300k-£500k, NO relief above £500k. England + NI only.

Nil-rate band (FTB)

£0 – £300,000

5% band (FTB)

£300,000 – £500,000

Above £500k

No FTB relief (standard rates)

Max saving vs standard

£11,250 at £500k

Applies to

England + NI (not Scotland/Wales)

Effective from

1 April 2025

Tax note: The £500,000 cliff is the big trap. At £500,000 you pay £10,000 SDLT (0% on first £300k + 5% on £200k). At £505,000 you pay ~£15,250 (standard rates: 2% on £125k-£250k + 5% on £250k-£505k), jumping £5,250 for a £5k price rise. Negotiate the purchase price down to £500,000 or below whenever possible. Scotland LBTT has its own first-time buyer relief (nil to £175k); Wales LTT has no specific FTB relief but a higher standard threshold (£225k).

Stamp Duty calculator →

Help to Buy ISA (legacy)

Closed to new applicants Nov 2019. Existing holders can claim bonus until 30 Nov 2030. Max £3,000 bonus.

Closed to new

30 Nov 2019

Contribution deadline

30 Nov 2029

Bonus claim deadline

30 Nov 2030

Max bonus

£3,000 on £12,000 savings

Property cap (outside London)

£250,000

Property cap (London)

£450,000

Tax note: You cannot use bonuses from BOTH a Help to Buy ISA and a LISA on the same property — HMRC makes you pick one bonus stream. For most savers the LISA wins because the £4k/yr contribution cap (vs £200/month = £2,400/yr for H2B ISA) compounds to a larger bonus. Rule of thumb: if your H2B ISA balance is below ~£5,000, consider transferring it to a LISA (the transfer counts toward the £4,000 LISA annual limit).

Compare LISA vs H2B ISA →

Shared Ownership

Buy 25-75% share + pay subsidised rent on the remainder. Two SDLT election paths, staircasing triggers further tax.

Initial share

25% – 75%

Rent on unowned share

≤3% of unowned value/yr (typical)

SDLT option 1

Market-value election (one-off on full price)

SDLT option 2

Pay on share only (staircase triggers more)

Full staircasing triggers

SDLT at >80% ownership

FTB relief eligible?

Yes, if first-time buyer

Tax note: The market-value election is irrevocable and only available at initial purchase. It's usually cheaper IF: (a) you plan to staircase to 100% within a few years, (b) the full market value is below the £300k FTB relief threshold (zero SDLT total), or (c) mortgage deposit is small enough to cover the upfront SDLT. Pay-on-share is cheaper short-term but compounds if you buy more shares — each staircasing step above 80% ownership attaches SDLT to the cumulative interest.

SDLT calculator →

First Homes scheme (England)

30-50% discount on new-builds for local first-time buyers and key workers. SDLT based on discounted price.

Discount

30% – 50% off market value

Max price after discount (England)

£250,000

Max price after discount (London)

£420,000

Eligibility income cap

£80,000 (£90,000 London)

Mortgage requirement

≥50% of purchase financed by mortgage

Discount persists on resale

Yes (to next FTB)

Tax note: Because SDLT is charged on the discounted purchase price, most First Homes buyers pay zero SDLT. The discount is a legal restriction on the property — when you sell, the same percentage discount must apply to the next qualifying buyer. Local councils can set priority rules (key workers, local residents, income below £X). Check the specific development's eligibility conditions before signing the reservation form.

SDLT calculator →

Cash ISA + mortgage deposit strategy

Beyond LISA: cash ISAs shelter deposit interest from tax; regular savers stack with LISA for the £20k ISA allowance.

Total ISA allowance 2025/26

£20,000

LISA portion (counts toward total)

£4,000

Cash ISA portion

Up to £16,000 if LISA maxed

Personal Savings Allowance

£1,000 BR / £500 HR / £0 AR

Starting Rate for Savings

£5,000 @ 0% (tapered by non-savings)

Typical saver uses

LISA first, then cash ISA

Tax note: If your savings interest would exceed your Personal Savings Allowance (e.g., £25k at 4.5% = £1,125 interest vs £1,000 PSA for basic rate), the excess is taxed at 20% for BR or 40% for HR. A cash ISA shelters all interest tax-free, making it meaningful for deposits above ~£22,000 at current rates. Always fill the LISA first (the 25% bonus beats any interest rate), then add a cash ISA.

Savings + dividend allowance optimiser →

Savings & completion timeline

Age 18+

Open a Lifetime ISA early

Must open before age 40. Every year of delay loses up to £1,000 of government bonus. Even a £1 account keeps eligibility open — worth opening now if under 40.
LISA calculator →
5 years before purchase

Maximise LISA annual £4,000 contributions

To capture the full £1,000/year bonus, contribute before 5 April each tax year. Bonus is paid monthly by HMRC so by the time you complete, bonuses are already in the account.
2-3 years before

Build an ISA-wrapped deposit

Once LISA is maxed at £4,000, use remaining £16,000 ISA allowance for a Cash ISA or Stocks & Shares ISA to shelter interest/growth from tax.
6 months before

Get a Decision in Principle from mortgage lender

Confirms what you can borrow and what deposit you'll need. LISA lenders must honour the purchase price even if market changes.
3-4 months before

Make an offer — check the £500k SDLT cliff and £450k LISA cap

At £450k+ you lose LISA eligibility AND must pay the 25% non-qualifying-withdrawal penalty on any LISA funds used. At £500k+ you lose first-time-buyer SDLT relief entirely — negotiate below these ceilings if your number is close.
SDLT calculator →
Completion day

Solicitor withdraws LISA + files SDLT return

LISA funds go straight to the solicitor, bypassing your current account. SDLT return must be filed within 14 days of completion (was 30 days pre-2019). First-time buyer relief claimed via the SDLT1 form.
First year in home

Claim working-from-home tax relief if applicable

If required to WFH by employer, PAYE workers can backdate 4 years. New homeowners often miss the switch. HMRC abolished relief from 6 Apr 2026 — last-chance backdate window is closing fast.
WFH tax relief →
Year 2+

Consider a regular ISA for mortgage overpayments

If you have spare cash flow, a stocks & shares ISA growing at 5-7% historically beats mortgage overpayment if your rate is below that — while preserving access. Otherwise, overpay the mortgage to shave years off the term.

Commonly missed opportunities

The £500k SDLT cliff — At £505,000 a first-time buyer pays roughly £5,250 MORE in SDLT than at £500,000 because FTB relief disappears entirely. Negotiate the price down to exactly £500,000 or ask the seller to cover the difference.
The £450k LISA ceiling — Buying a £451,000 property using LISA funds triggers a 25% non-qualifying withdrawal penalty on the entire LISA balance. Below £450k, zero penalty; above, thousands lost. Watch out in London.
Maximise LISA contributions before each 5 April — The bonus is paid on contributions in a tax year. A £4,000 deposit on 5 April earns the same bonus as one on 6 April of the prior year — but you're one tax year behind on eligibility.
Transfer Help to Buy ISA into LISA — Transfers count toward the LISA £4,000 cap but not the £20,000 ISA allowance, so you preserve the 25% bonus path with a larger annual cap.
SDLT return 14-day deadline — Filing late adds penalties. Solicitors usually handle this but double-check on completion day.
Joint purchase with non-FTB spouse — If one spouse has owned before, the whole purchase loses FTB relief. Buying in the first-time buyer's sole name retains relief but requires sole-name mortgage (harder to qualify). Some buyers proceed jointly and forfeit relief — check the cost before deciding.
Claim WFH tax relief before 6 Apr 2026 abolition — If you move home AND are required to WFH by your employer, backdate 4 tax years of £6/week relief under the old regime. HMRC removed the relief going forward but prior-year claims remain open.
Shared ownership staircasing SDLT gotcha — Each share purchase above 80% cumulative ownership triggers SDLT on the total interest, not just the new share. Either staircase to 100% in one go, or stay below 80% if no immediate plan.

Frequently asked questions

What are the 2025/26 Stamp Duty first-time buyer thresholds?

From 1 April 2025 SDLT first-time buyer relief reverted to the pre-2022 thresholds: 0% on the first £300,000 and 5% on the portion between £300,000 and £500,000. Property price above £500,000 gets no first-time buyer relief at all — the buyer pays standard rates on the whole purchase, meaning a £505,000 home costs roughly £15,000 MORE in SDLT than a £500,000 home. England and Northern Ireland only — Scotland uses LBTT, Wales uses LTT.

How does the Lifetime ISA work for a first home?

A LISA lets you contribute up to £4,000 per year from age 18-49, and the government adds a 25% bonus (up to £1,000/year) paid monthly. You can withdraw tax-free for a first home purchase if: (1) the property is £450,000 or less, (2) the LISA has been open at least 12 months, and (3) you're a first-time buyer. Withdrawals for any other reason before age 60 face a 25% withdrawal penalty, which actually returns LESS than you contributed — a £4,000 deposit becomes £5,000 with bonus, then −£1,250 penalty leaves £3,750.

What happened to the Help to Buy ISA?

The Help to Buy ISA closed to new applicants on 30 November 2019, but anyone who opened one before that can keep contributing until 30 November 2029 and claim the bonus until 30 November 2030. It pays a 25% bonus up to £3,000 on £12,000 of savings, with a property cap of £250,000 (£450,000 London). You cannot hold both a Help to Buy ISA AND a LISA and use bonuses from both for the same property — you must pick one. For most savers the LISA is the better vehicle because the bonus cap (£1,000/year) compounds longer.

Can I combine LISA and first-time buyer SDLT relief?

Yes. They are separate reliefs. The LISA gives you a 25% bonus on up to £4,000 per year of savings; the SDLT first-time buyer relief zeroes stamp duty on the first £300,000 of the purchase. A first-time buyer purchasing a £400,000 property using £20,000 of LISA funds (incl. £4,000 bonus) would pay SDLT of £5,000 instead of £10,000 (rUK post-Apr 2025) AND get £4,000 of LISA bonus — a combined £9,000 of government support.

What is Shared Ownership and how is it taxed?

You buy a 25-75% share of a property from a housing association and pay subsidised rent on the remainder. SDLT has two options: (1) pay on the market value of the whole property up-front (a one-off 'market value election'), or (2) pay on the purchase price of your share only — but if you later buy more shares (staircase) above 80% ownership, further SDLT becomes due on the full value. The market-value election is often cheaper if you plan to staircase to 100%, but requires more upfront cash. Shared-ownership buyers are still eligible for SDLT first-time buyer relief if they qualify.

Do I pay SDLT on a First Homes scheme property?

First Homes (England only) gives new-build homes a 30-50% discount to first-time buyers who meet local eligibility. SDLT is charged on the discounted price you pay, not the full market value — so a £320,000 home sold at a 30% discount for £224,000 gives the buyer no SDLT to pay (under the £300k FTB threshold). Maximum purchase price (after discount) is £250,000 outside London and £420,000 in London. The discount carries over to future sales — when you resell, the same % discount must apply to the next eligible buyer.

Sources

Last updated April 2026. SDLT rates effective 1 April 2025 (first-time buyer relief reverted from temporary £425k/£625k to pre-2022 £300k/£500k thresholds per Autumn Budget 2024). LISA rules unchanged since 2017 (£4,000 annual cap, 25% bonus, £450k property cap). Scotland uses LBTT, Wales uses LTT — see your devolved-nation guidance. This is general information — consult a solicitor or mortgage adviser for your specific purchase.