Stamp Duty Land Tax (SDLT) is a significant cost for anyone buying property in England and Northern Ireland. However, there are several reliefs and exemptions available that can reduce the amount of stamp duty you need to pay—or eliminate it entirely. In this guide, we’ll explore the main stamp duty reliefs available in 2024 and explain how you can qualify for them, whether you’re a first-time buyer, investing in shared ownership, or purchasing through a charity.
1. First-Time Buyer Relief
One of the most widely used stamp duty reliefs is for first-time buyers. Introduced to help new buyers get onto the property ladder, this relief can significantly reduce or eliminate the amount of stamp duty you pay on your first home.
How It Works:
- If you are a first-time buyer purchasing a residential property worth up to £425,000, you won’t pay any stamp duty on the first £425,000.
- If the property value is between £425,001 and £625,000, you will pay 5% on the portion above £425,000.
- If the property is above £625,000, the standard SDLT rates apply, and first-time buyer relief does not apply.
How to Qualify:
To qualify for first-time buyer relief:
- You (and anyone you are buying the property with) must never have owned a residential property in the UK or abroad.
- The property must be your primary residence, meaning it is not an investment or second home.
First-time buyer relief is an excellent way to make purchasing a home more affordable for those entering the market for the first time.
2. Relief for Shared Ownership Buyers
Shared ownership schemes allow buyers to purchase a percentage of a property while paying rent on the remaining portion, making home ownership more accessible. Stamp duty on shared ownership properties can be paid either on the full market value or on the initial share you are purchasing.
How It Works:
You can either:
- Pay stamp duty on the full market value of the property upfront (even though you are only purchasing a share). This option may save you from paying additional SDLT later when you staircase (increase your ownership share).
- Pay stamp duty on the initial share only. If your share is worth less than £250,000, you may not need to pay any SDLT at all.
How to Qualify:
To qualify for shared ownership relief:
- The property must be part of an approved shared ownership scheme.
- You must choose how you want to pay SDLT at the time of purchase, as this affects future payments if you increase your ownership stake.
Shared ownership buyers should carefully consider which payment option works best for their long-term financial situation.
3. Relief for Charities
Charities that are buying property for charitable purposes can often benefit from SDLT relief. This relief can make purchasing properties more affordable for organisations that are focused on charitable work.
How It Works:
- Charities are exempt from paying stamp duty if the property will be used for charitable purposes, such as providing housing or conducting charitable activities.
- This exemption applies to both residential and commercial properties.
How to Qualify:
To qualify for charity relief:
- The organisation must be a registered charity or a recognised charitable body.
- The property must be used wholly or mainly for charitable purposes. If only part of the property is used for charitable purposes, a partial relief may be available.
Charity relief helps organisations allocate more funds toward their missions rather than property taxes.
4. Multiple Dwellings Relief (MDR)
If you’re purchasing multiple dwellings—such as a block of flats or multiple homes in one transaction—you may qualify for Multiple Dwellings Relief (MDR), which can reduce your stamp duty bill significantly.
How It Works:
- MDR allows you to calculate stamp duty based on the average value of the dwellings, rather than the total transaction value.
- The relief applies when you buy at least two dwellings in a single transaction or when one property is subdivided into multiple homes.
For example, if you purchase two homes for £600,000, the SDLT will be calculated as though each home is worth £300,000, potentially lowering your tax liability.
How to Qualify:
To qualify for MDR:
- You must purchase at least two separate dwellings in one transaction.
- The properties must be capable of being lived in separately (e.g., individual flats or houses).
This relief is particularly beneficial for property investors or developers purchasing multiple units.
5. Zero-Carbon Homes Relief (Historical)
While not available in recent years, it’s worth mentioning that the UK has historically offered SDLT relief for zero-carbon homes. These homes are designed to be environmentally friendly, and the government has occasionally provided incentives like stamp duty relief to encourage eco-friendly building practices.
While this relief isn’t currently in effect, it’s possible that the government may reintroduce similar incentives in the future, particularly as sustainability continues to be a key focus in the housing market.
How to Apply for Stamp Duty Relief
If you believe you qualify for any of these reliefs, you’ll need to claim the relief when you submit your SDLT return. This is typically done by your solicitor or conveyancer during the property transaction process. They will ensure that you receive the correct relief based on your situation and the type of property you are purchasing.
Stamp duty reliefs offer a great way to reduce the financial burden of purchasing a property, whether you’re a first-time buyer, investing in shared ownership, or buying through a charity. Understanding how to qualify for these reliefs can help you save thousands in property taxes.
