New Stamp Duty Land Tax (SDLT) Rates for First Time Buyers
Stamp Duty abolished for first time buyers
In his budget statement this afternoon the Chancellor announced the introduction of a new relief from stamp duty land tax (SDLT) on purchases by first-time buyers of a single residential property (a dwelling) where the price paid is not more than £500,000. No SDLT will be payable on the first £300,000 of the purchase price. 5% will be chargeable on the remainder. The measures apply to transactions, or completions on or after 22 November 2017.
|Purchase price bands (£)||Current standard rates (%)||New rate for first time buyers (%)|
|Up to £125,000||0%||0%|
|Above £125,000 and up to £250,000||2%||0%|
|Above £250,000 and up to £300,000||5%||0%|
|Above £300,000 and up to £500,000||5%||5%|
|Above £500,000||normal rates apply||normal rates apply|
A few questions you may be asking yourself
What does first time buyer mean?
An individual or individuals who have never owned an interest in a residential property in the United Kingdom or anywhere else in the world and who intends to occupy the property being purchased as their “main residence”. So children that have inherited an interest in property owned by their parents or grand parents in Spain could be precluded from the new relief. If a couple are buying a property together and one has previously had an interest in residential property, consideration will need to be given to the one who qualifies for the relief making the purchase solely in his or her name.
We exchanged contracts on the 14th November 2017
The exchange of contracts is not the fulfillment of the deal for the property purchase so providing the actual completion of the contract takes place on or after the 22nd November the new relief will still apply.
Is the relief automatic?
The relief must be claimed in an SDLT return.This would normally be done by the solicitor acting for you in your conveyancing. If you are due to complete later this week it will be worth making sure that the SDLT return has been amended by your solicitor to claim the relief if you qualify as a first time buyer.
Our home will cost £501,000 how will it affect us?
First time buyers purchasing property for more than £500,000 will not be entitled to any relief and will pay SDLT at the normal rates. This makes a big difference. If the price you pay is only £1 over the £500,000 limit you will pay an additional £10,000 of stamp duty!
The value of the property is also known as the ‘consideration’, and in the majority of cases is the amount that is paid, although payment may include other various factors. These can include transfer of or release from a debt, which may take into account the value of any mortgage outstanding, services or work or any associated goods.