How Do First Time Buyers Benefit From Stamp Duty?
For many homebuyers, stamp duty tax, or as it is officially known, Stamp Duty Land Tax (SDLT) is the biggest add-on cost in a property transaction.
First-time buyers were among the biggest winners in the autumn budget that Chancellor Philip Hammond introduced in November 2017 in relation to the stamp duty cut.
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.
The First Time Buyer Scheme is part of the Government’s commitment to support first-time buyers and home ownership. Therefore, by introducing this relief first time buyers will be able to reduce their upfront costs, and this enables them to purchase their first home.
Whilst we have given you an insight into stamp duty for first time buyers, if you are looking for professional and experienced solicitors in conveyancing, please contact Aurora Dedja-Lika at the Commercial Property Team at The Sethi Partnership Solicitors.
T: +44 (0)20 8866 6464
The Sethi Partnership Solicitors I The Barn House I 38 Meadow Way I Eastcote I Ruislip I Middlesex I HA4 8TB
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