What is the Stamp Duty Relief for First Time Buyers?
Posted on 1st December 2017 at 10:30
The Autumn Budget of 2017 has lent a helping hand to first time buyers who may have once shied away from purchasing a property because of the Stamp Duty Land Tax implications. Read more about how this could help you purchase your first property.
What is Stamp Duty Land Tax?
UK stamp duty was first introduced in 1694. The main reason for the payment was to raise money to fund the war with France. The tax was supposed to be a temporary solution in order to raise money however, it remained in place because of its success and eventually became a permanent form of UK taxation.
The tax is referred to as stamp duty because it once involved physically stamping an official document to show the appropriate tax had been paid on a transaction. However, this is no longer necessary as stamp duty taxation records are now updated electronically.
Stamp Duty Land Tax (SDLT), first introduced on 1st December 2003, is a charge payable when acquiring property, both residential and non-residential. This includes the acquisition of freehold, leasehold and shared ownership property. The threshold for residential transactions is £125,000.00 (unless you are a first time buyer – see further down our blog for more information), and, below this amount, SDLT is not payable, provided that the acquisition does not result in the clients owning more than one property. In such cases, SDLT is charged at a higher rate as an additional property fee.
For non-residential transactions, the same rules apply, however, the threshold extends to £150,000.00. The amount of SDLT payable is dependent on the purchase price of the property, and, understandably, the SDLT amount increases in correlation with the increase in purchase price.
At MG Legal, when we provide you with an initial quote for our services, our conveyancing solicitors will calculate the amount of SDLT you will pay and make you aware from the outset of this. This will also be reflected within our Completion Statement which is provided prior to Completion and sets out all our fees and disbursements which have been incurred throughout the matter.
Who can claim the First Time Buyer Relief?
As it says on the tin, the relief applies to first time buyers who are purchasing a residential property up to £300,000.00. Ultimately, this makes the clients exempt from paying any Stamp Duty at all.
Clients who are first time buyers but are purchasing above the £300,000.00 will then only pay 5% up to £500,000.00. It is, however, important to note, that clients purchasing in joint names must both be first time buyers in order to benefit from the new regime.
This will not apply if the clients have ever owned, partly owned or inherited property before. The exemption applies only to transactions which are carried out on or after 22nd November 2017, which, unfortunately, means that any previous clients who have already paid their SDLT, will not be eligible for any form of refund.
How does it work?
The conveyancing solicitor deals with the Stamp Duty Land Tax upon Completion of the purchase. For first time buyers, solicitors simply select an exemption option on the Inland Revenue SDLT website which indicates the clients are first time buyers and so, can benefit from this new relief. The SDLT must be paid within 30 days of Completion of the transaction and, likewise, the exemption must be confirmed and claimed within this same time frame.
At MG Legal, our specialist conveyancers usually do this within the first few days of Completion, to ensure no issues arise for our clients.
Here at MG Legal this gives us great pleasure as, not only are our valued clients making large savings, but, there is no anticipation of paying out a SDLT fee at the end of the transaction. This allows our clients to enjoy their new home without the worry of Stamp Duty Land Tax implications.
We set out all our costs, as a fixed fee, from the outset. This way, you can be sure that no hidden fees arise throughout the transaction, and for first time buyers, this now includes Stamp Duty. This is one less thing to think about during the conveyancing process and eases the, pressure of, what can be, a stressful, but exciting process.
Want to know whether you fall into the exempt category? Are you purchasing your first home and want more information on the implications of SDLT?
Contact our specialist team of Conveyancing Solicitors on 01995 602 129, or drop us an email at email@example.com.
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Tagged as: Conveyancing, First Time Buyers, Lancaster Property Law, Lancaster Solicitors, Law, MG Legal, Preston Solicitors, Property Advice, Purchase, Solicitors, Stamp Duty Advice
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