A new relief has been introduced for First-time-buyers within England, Wales* and Northern Ireland that will raise the price at which a property becomes liable for stamp duty land tax (SDLT) to £300,000 for transactions taking effect on or after 22 November 2017.
Those claiming the relief will pay no SDLT on the first £300,000 of the consideration and 5% on any remainder up to a maximum purchase price of £500,000.
First-time buyers paying more than £500,000 will not be eligible for any relief.
*From 1 April 2018, Wales will assume responsibility for setting its own land transaction tax rates.
What is stamp duty?
This is a tax that applies to both Leasehold and Freehold properties regardless of whether you are purchasing with a mortgage or outright.
Who is likely to be affected?
Individuals purchasing a residential property for the first time within England, Wales and Northern Ireland.
Who qualifies for first time buyers’ stamp duty relief?
- You must be a first-time buyer and must have never had an interest in a property anywhere in the world whether this was purchased or inherited. If there are others that are involved in the purchase of the property with you, they must also be first time buyers.
- You must intent to live in the property that you are purchasing in that this will be your main residence.
- The price of the property that you are purchasing must be less than £500,000.00
What relief will you be entitled to as a first time buyer?
Depending on the value of the property, you will either pay a reduced rate or no stamp duty. This will vary on the following; –
- If the value of the property is £300,000.00 or less, you will be exempt from paying any stamp duty.
- If the value of the property is between £300,000.00 and £500,000.00 stamp duty will be charged at an amount of 5%.
- If the value of the property is over £500,000.00 the relief will not apply to you.
How to work out how much stamp duty is payable?
You can use HMRC’s calculator to work out how much SDLT you will have to pay, which must be paid within 14 days of your transaction completing.
In practice, your Solicitor will likely take this payment from you and pay HMRC on your behalf.
How has stamp duty impacted first time buyers so far?
Figures published by HMRC this year have revealed that there has been a 3% increase in the first-time buyer relief claims from the previous quarter, with 78% of transactions paying no Stamp Duty Land Tax (SDLT) at all.
SDLT Higher Rate Changes
Minor changes to the operation of SDLT have also been introduced to grant relief under certain transactions falling within the higher SDLT rates.
Should you wish to discuss any of these changes, please contact our Property Team. info@vyman.co.uk or call Vyman at +44 (0) 20 8427 9080