SDLT First Time Buyers’ Relief
Updated 16 November 2018 by John Shallcross.
Starting from the day of the Budget on 22 November 2017 relief from Stamp Duty Land Tax (SDLT) is available for first time buyers paying up to £500,000 for a residential property within England, Wales and Northern Ireland completing on or after Budget Day. There is no end date built into the relief.
First time buyers’ relief can be available even if contracts were exchanged before the date of the Budget. But for those who completed the purchase before the day of the Budget there is no ability to take advantage of the relief.
First time buyers who qualify for the relief will pay no SDLT on the first £300,000. If the price is between £300,000 and £500,000 they pay 5% on the amount in excess of £300,000 which is a reduction of £5,000 compared to the amount of SDLT they would have paid under the normal rates regime.
However, if the purchase price exceeds £500,000 then the full rates of SDLT will apply without any relief.
A first time buyer is an individual who has never acquired a major interest in a dwelling in the UK or anywhere else in the world. A first time buyer must also intend to live in the property as their only or main residence.
The rules ceased to have in effect in Wales from 1 April 2018 when Land Transaction Tax replaced SDLT. LTT has no first time buyers’ relief.
John Shallcross, Blake Morgan's stamp duty land tax specialist, has written a detailed article about first time buyers’ relief with EXAMPLES to illustrate the more complex parts of the rules. See more here:
For example he explains:
- What counts as a “major interest”: broadly a property held freehold or leasehold (21 years or more) or a share in such a property.
- That the test looks at interests “acquired” which could be by way of gift or inheritance as well as by purchase.
- That oddly someone who acquired a property which was not a dwelling at the time (it might have been a plot or a commercial property) can still qualify as a first time buyer even if a dwelling was later built on the property and owned by the person.
- What is meant by the requirement to intend to live in the property as an only or main residence.
- How the rules work for joint buyers.
- The odd position if a person (who would otherwise qualify as a first time buyer) buys a property alone but is married to (or is in a civil partnership with) someone who owns another property.
- The position with properties bought in the name of a nominee or where trusts are involved.
- What happens with properties with a granny flat or other ancillary dwellings.
- The treatment of cases where property is put into joint ownership, such as where it belongs to one person but a share is transferred to a spouse so they jointly own it (particularly where there is a mortgage).
- The special rules for shared ownership leases (which were changed by the 2018 Budget on 29 October 2018 with retrospective effect).
- How linked transactions can prevent the relief applying or cause a clawback of relief previously claimed.
For professional advice on SDLT, please contact John Shallcross.