26 November 2017
So the newspapers have focused on the headline - SDLT not applicable for first time buyers. But what about the detail?
The crucial point is that the relief only applies to first time buyers. First time buyers is defined as an individual who has never had a major interest in a dwelling or equivalent interest in land...... Anywhere in the world.
A major interest also includes inherited or gifted dwellings, but excludes previous acquisition by a Trustee unless the purchaser is a beneficiary of said Trust.
Where more than one person is involved in buying the dwelling (such as husband/wife, civil partnerships, etc), all persons involved must meet the same criteria above.
Finally, the dwelling must be the buyers main residence, if a couple are buying the dwelling, both must make it their main residence. So the conditions for the relief are quite narrow and are not as far reaching as the headline may suggest.
The relief only applies to England and Wales. Scotland operates a Land and Buildings Transaction Tax (LBTT) under its devolved powers. From April 2018, Wales obtains new devolved powers, which include SDLT and will be renamed Land Transactions Tax (LTT). So if planning to buy property in Wales, might be worth comparing English and Welsh rates, because they do differ, to determine when the best time to buy is.
Calculations
The relief applies to properties upto £500,000 in value.
Where the conditions are met, the first £300,000 is not subject to SDLT. The remaining value up to £500,000 is subject to a 5% rate. As an example, a property is purchased for £450,000
£0 - £300,000 = 0% = £Nil SDLT
Remaining £150,000 = 5% = £7,500 SDLT due
Detailed exaplanation of the legislation and conditions for the relief are found in the below link.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/661728/8274_guidance_note_SDLT_relief_for_first_time_buyers.pdf
Don’t leave this to chance, getting it right at the start will save time and money later, so speak to your advisors or speak to us, our VAT and Stamp Duty Land Tax advice is not as expensive as you think. VAT.tamworth@hwca.com
