In the Budget on 22 November 2017, the Chancellor of the Exchequer announced a relief from stamp duty land tax (SDLT) for first time buyers. The relief will apply from 22 November 2017 to purchases of residential property for £500,000 or less, provided the purchaser intends to occupy the property as their only or main residence. First time buyers purchasing their first home for £300,000 or less will pay no SDLT. Where the purchase price is over £300,000 but does not exceed £500,000 they will pay 5% on the amount above £300,000. The relief will apply to purchases in England, Wales and Northern Ireland. In Wales, it will apply until Land Transactions Tax replaces SDLT for transactions in Wales from 1 April 2018.
Broadly, this relief applies where:
- there is a purchase of a single dwelling,
- the purchase price is not more than £500,000,
- the purchaser or, if there is more than one, each of them, is an individual,
- the purchaser or, if there is more than one, each of them, is a first time buyer, who intends to occupy the dwelling as their only or main residence,
- the effective date of the transaction is on or after 22 November 2017, and
- the purchase is not linked to any other land transactions, except for land that is or forms part of the gardens or grounds of the dwelling, or land that subsists for the benefit of either the dwelling or its garden and grounds.
Relief is not available if the purchase is of an additional dwelling, which is liable to the higher rates of SDLT under schedule 4ZA FA 2003.
The relief does not apply to the purchase of non-residential or mixed use properties. A mixed-use property is one which includes both residential and non-residential elements, such as a shop with a flat above.
Where relief is available the rates of SDLT applicable are:
- 0% on the first £300,000 of the purchase price, and
- 5% on the amount above £300,000.
For example the tax due on the purchase of a dwelling by a first time buyer for £450,000 would be £7,500, calculated as follows:
- On the first £300,000 of the purchase price 0% £0
- On the remaining £150,000 5% £7,500
Contact Latimer Lee’s conveyancing department on 0161 797 4000.