First Time Buyer Stamp Duty Land Tax Relief – Do I Qualify?
“First Time Buyer Stamp Duty Land Tax Relief – Do I Qualify?” Trainee Solicitor Leonnie Watson discusses in her latest Timms blog…
Stamp Duty Land Tax (SDLT) is one of the larger expenses involved when it comes to purchasing a property or a piece of land. SDLT is a one-off tax that must be paid when you buy a property over £125,000.
The first-time buyer relief came into effect in November 2017 when the Government made changes to the Stamp Duty Thresholds. This meant that providing the property being bought is less than £300,000, first-time buyers do not pay any SDLT. The aim of this was to help more people onto the property ladder.
Am I Classed As A First Time Buyer?
The definition of a first-time buyer is ‘a person buying a house or flat who has not previously owned a home and therefore has no property to sell.’
So, on the face of it, you would think to be a first-time buyer you are, simply, to be buying a house for the first time. But all is not so black and white…
The ‘buyer’ part of first-time buyer is a little misleading because although you may not have bought a house before, you are not classed as a first-time buyer if you have: –
- Inherited a property; or
- Are named on the deeds of another property.
You are also not classed as a First Time Buyer if you are purchasing a ‘buy to let’ property. To be eligible for the relief you must be purchasing the property to live in it.
If you are buying as a couple and one person has purchased a property before, despite you now purchasing a property together and one of you still being a first time buyer, you are not eligible for the relief and will be required to pay the full SDLT amount.
What Are The Rules For a First Time Buyer?
- First-time buyers paying £300,000 or less for a residential property pay no SDLT
- First-time buyers paying between £300,001 and £500,000 will pay SDLT at a reduced rate of 5% on any amount over £300,000. (i.e. if you purchase a house at £450,000, there will be no SDLT payable on the amount up to £300,000 but SDLT will be payable at a rate of 5% on the remaining £150,000.)
- First-time buyers paying in excess of £500,000 are not entitled to any SDLT relief and must pay the full amount
What If I Am Not A First Time Buyer?
In the UK, if you purchase a property under £125,000 regardless of whether you are a first-time buyer or not you do not have to pay SDLT (providing that you do not own any other properties).
If the property is over £125,000, the rate at which you pay stamp duty depends on the purchase price.
What Will I Pay If I Am Not Considered A First Time Buyer?
Property value |
Amount of SDLT |
| Up to £125,000 | 0% |
| £125,0001 – £250,000 | 2% |
| £250,0001 – £925,000 | 5% |
| £925,001 – £1,500,000 | 10% |
| Above £1,500,001 | 12% |
For Example..
Stamp Duty is a progressive tax. This means that when you purchase a house, you pay a higher percentage as the property purchase price rises. But you only pay the higher rate for the portion of the price at that rate. See an example below:
Mr X and Mrs X buy a property for £300,000.
Both Mr X and Mrs X have owned a property before and lived in this property before, so they are not first-time buyers.
Mr X and Mrs X will pay nothing on the first £125,000.
Mr X and Mrs X will pay 2% on the next £125,000 = £2,500
Finally, Mr X and Mrs X will pay 5% on the remaining £50,000 = £2,500.
A total of £5,000 SDLT will be payable.
What If I Am A Non-UK Resident Buying A Residential Property?
If you are a non-UK resident buying a residential property in England or Northern Ireland, you might have to pay an additional 2% on top of the existing Stamp Duty rates for properties costing more than £40,000.
How Can Timms Help?
If you’re thinking of buying a property and wonder whether you will need to pay SDLT, it is worth working it out on the Governments Stamp Duty Calculator.
Alternatively, if you have any questions regarding this matter, please do not hesitate to contact me. You can reach me on 01283 561531 or via email at l.watson@timms-law.com. Additionally, you can visit the Conveyancing page of our website here.
May 2022