Here’s everything you need to know regarding the stamp duty land tax relief for first-time buyers.
Who is behind it?
During the Chancellor of the Exchequer’s presentation of the Autumn Budget 2017 to parliament, there were several announcements regarding stamp duty. One of the more significant parts of the budget for first-time buyers was around the relief from stamp duty.
When did it start?
Since 22 November 2017, if you are purchasing a residential property that costs £500,000 or less, you may be entitled to stamp duty relief. If you purchased a property that completed before this date, unfortunately, the first-time buyer relief does not apply to you.
Who qualifies for first-time buyer stamp duty relief?
The relief applies to purchases made in England, Wales, and Northern Ireland. There are a number of conditions that you must meet in order to be eligible for the relief. There can be no substitute to fully reading the guidelines yourself in the Guidance Note, but we have summarised the four conditions below.
1 You must be a first-time buyer
The Guidance Note provides a full definition of what constitutes a ‘first-time buyer’. Generally, if this will be the first home you have ever purchased, you will count as a first-time buyer. If others are involved in the purchase of the property with you, everyone must be a first-time buyer.
2 You must intend to live in the property
The Guidance Note refers to this as your ‘main dwelling’. So long as you intend for the property to be your home, you will most likely satisfy this condition. As part of this, it is also worth noting that companies are not allowed to be involved in the purchase of the property.
3 The price of the property must be less than £500,000
This one is exactly as it sounds. Only the costs that would normally be considered in working out how much stamp duty you pay will apply. There are some finer points around this:
• Rent to pay under a lease will not be considered.
• If you are planning to purchase multiple properties in the same transaction, you will probably not meet the requirements for this condition. There are some exceptions to this rule which fall under the fourth condition regarding linked transactions (more on this below). If these exceptions apply to you, the total cost will be worked out as the sum of your linked transactions.
4 Linked Transactions
If you are buying multiple dwellings as part of one transaction, it’s likely that you will not be eligible for relief unless it’s a linked transaction. For example, you may wish to purchase other dwellings, such as land, rights of way, or gardens that the home you intend to buy depends on having. If this applies to you, you can find more information via the Stamp Duty Land Tax Manual.
What relief will you get?
The amount of relief you will receive is based on the cost of the property you are purchasing. The first £300,000 of the purchase price will be exempt from stamp duty. This means, as a first-time buyer, you may not have to pay stamp duty at all. For any amount that exceeds £300,000, stamp duty will be charged at an amount of 5%. Unfortunately, if your transaction goes over £500,000, the relief won’t apply to you.
Rather helpfully, the government has provided a calculator to assist with working out the costs of stamp duty.
If I complete a transaction before 22 November 2017, am I eligible for the relief?
If your transaction completed before 22 November 2017, the stamp duty relief will not apply to you.
How do you claim first-time buyer stamp duty relief?
We would recommend reading Chapter 7 of the Guidance Note, but as a rule of thumb it states that ‘Relief must be claimed either in a land transaction return or an amendment to that return’.
For more information
Please don’t hesitate to contact us here at the Chancellors Group. If you would like any further help or guidance, please visit or call your local branch. Our specialist financial services team, Life Financial Services, will also be happy to help with any questions you might have.
Correct at time of publication (20th November 2018). The views and opinions expressed herein are those of the individual contributor and do not necessarily reflect those of the Chancellors Group of Estate Agents Ltd or its subsidiaries. References to legislation, best practice and other matters with legal implications such as fees, rules and processes are included for information and editorial purposes only and are not authoritative, nor should they be interpreted as advice. When in doubt you should only take advice from an industry professional or solicitor where appropriate. E&OE.