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First-time Home Buyers: an Insight to Stamp Duty Land Tax Relief

First-time Home Buyers: an Insight to Stamp Duty Land Tax Relief

Buying a house for the first time is both exciting and daunting. You might send your head spinning with all the financial requirements, fees and budgeting you’ll need to consider, but thankfully things aren’t quite so scary as they once were.

Since 22nd November 2017. First-time buyers purchasing a residential property for less than £500,000 can apply for a stamp duty land tax relief — meaning they may end up paying no stamp duty land tax at all. Let’s look at this arrangement in more detail.


Who is classed as a first-time buyer?

To qualify as a first-time buyer, you must not — either alone or with others — have previously acquired a major interest in a dwelling or an equivalent interest in land anywhere in the world. This includes an interest as a result of a gift or inheritance, or by a financial institution on behalf of a person under an alternative financial scheme.


What is stamp duty land tax (SDLT)?

Stamp duty land tax is a government-mandated tax on property transactions over a certain monetary threshold. For residential properties, if you are not a first-time buyer, you must pay SDLT on any residential property worth over £125,000. Some transactions which the tax applies to are as follows:

  • Purchase a freehold property.
  • Purchase a new or existing leasehold.
  • Purchase a property through a shared-ownership scheme.


How does the relief scheme work?

The SDLT relief system is simple, with clear thresholds set out to help first-time buyers understand how much of a discount they are able to receive. SDLT relief can be calculated as follows:

  • Purchase of a residential property up to £300,000 = 0% SDLT
  • Purchase of a residential property up to £500,000 = 0% SDLT on the first £300,000 and 5% on the remaining balance up to £500,000.

If you’re a first-time buyer who purchases a residential property of over £500,000, then SDLT is paid at the standard rate, and you receive no discount/relief for any portion of the value price.


Top tips for first-time buyers

  • You cannot claim first-time buyers relief if you or your spouse is not a first-time buyer — regardless of whether your spouse will be purchasing the property with you or not.

  • If you are purchasing with a spouse who is not a first-time buyer, talk to an experienced residential conveyancer, to see if you are entitled to other reliefs or benefits.

  • First-time buyers can automatically claim relief from paying SDLT if they are purchasing a residential property for less than £300,000.

  • You must have intent to occupy the property as your main residence.

  • SDLT must be paid within 14 days of the purchase.

  • Check the government’s official guidance notes for STLD to find out more about this tax relief scheme.

If youre in need of expert conveyancing support whether youre a firsttime buyer or not, contact us at Hawkridge & Company today.

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