First time buyers have been given a boost in the Budget announced today with a discount on stamp duty land tax for properties with a value of up to £500,000. JWS solicitor Emma West explains...
What is stamp duty land tax (SDLT)?
SDLT is a tax you pay on completion of your purchase of a property (whether freehold, leasehold or transfer of part).
SDLT is calculated in percentage bands on the value of the property above the threshold of £125,000 for residential properties.
Standard SDLT rates:
Standard rates for those who have bought a home before or who will not qualify for first time buyer rates are as follows:
Tax on value up to £125,000 = zero
Tax on value £125,001 to £250,000 = 2%
Tax on value £250,001 to £925,000 = 5%
Tax on value £925,001 to £1.5 million = 10%
Tax on remaining amount above £1.5 million = 12%
What are the new rates for first time buyers?
You will qualify for SDLT relief if you are buying your first home, you complete your purchase on or after 22 November 2017 and the value of the property you are buying is less than £500,000.
The new rates are as follows:
Tax on value of property up to £300,000 = zero
Tax on value of property £300,001 to £500,000 = 5%
This means first time buyers that complete their purchase from today will qualify for an SDLT saving of up to £5,000.
Emma West - solicitor, operations and strategy
“As a solicitor acting for many first time buyers, as well as having experienced being a first time buyer myself, this is great news. First time buyers are under immense pressure to find cash to cover their deposit, legal fees and moving costs. When you have spent time budgeting, saving and counting each penny - every little helps!
This initiative from the government, as well as others such as lenders favouring cash back over “free legals”, will free up cash for first time buyers to invest in quality legal advice that will ease the process of buying and protect their investment for the future.”
Use the HM Revenue and Customs calculator to calculate your SDLT saving: https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro