When you purchase a property or land in the UK, you may have to pay Stamp duty land tax (SDLT) which is a form of tax. This tax applies to properties regardless of whether it is a freehold or leasehold and whether you are purchasing with cash or with a mortgage.
To help first time buyers get onto the property market, the stamp duty land tax (SDLT) relief was introduced for first time buyers at Budget 2017. The objective of this relief correlates to the government’s commitment to support home ownership and first-time buyers by reducing the up-front costs associated to a property purchase.
The relief took effect from 22 November 2017 where first-time buyers of a residential property in the UK can claim relief from Stamp Duty Land Tax (SDLT).
If you are purchasing a residential property in the UK for the first time, you can claim relief if both of the following apply:
- You intend to purchase the property as your main residence
- The purchase price is below £625,000
The following is the SDLT rates for anyone eligible for first time buyers’ relief:
|Purchase Price of Property||Stamp Duty Rates (2023) For First Time Buyers|
|£0 – £425,000||0%|
|Over £425,000 – £625,000||5%|
|Over £625,000||Normal stamp duty rates apply|
For example, if you are purchasing a property for £500,000 you would need to pay £3,750 for SDLT (£0 on the first £425,000 and £3,750 for the remaining £75,000 i.e., 5% of £75,000).
If the property price is more than £625,000 then you will not be entitled to the relief even if you are a first-time buyer, and you would need to pay the standard SDLT rates on the total purchase price.
Who is classed as a first-time buyer?
A first-time buyer is an individual who has never had any interest in a residential property in the UK or anywhere else in the world and are looking to purchase a property to occupy as their main residence. This includes both freehold and leasehold properties.
The relief only applies to individuals and does not apply to companies or limited liability partnerships (LLP).
If you are a first-time buyer but would like to purchase a buy-to-let property you would not be able to apply for the relief as the relief only applies to property purchases with the intention of occupying the property as your main residence.
If you have inherited a property then you would not be classed as a first-time buyer, even if you have never purchased a property before.
If you are purchasing a property with someone else, the relief will only apply where both of you are first time buyers. Therefore, if either one of you have purchased a residential property previously anywhere in the world you will not be able to claim the relief even if the other buyer has never purchased a residential property and is classed as a first-time buyer.
If you are married or in a civil relationship, then you will be classed as one party. Therefore, you will not be entitled to the relief if one of you has owned a property previously.
Exemptions to the relief
The relief is not applicable to non-residential, mixed-use properties or acquisitions of more than one dwelling in a single transaction as these are transactions fall under the higher rate SDLT band. A mixed-used property is a property which includes both residential and non-residential elements, such as a ground floor shop with a flat above.
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