Stamp Duty Land Tax is usually required to be paid to HM Revenue and Customs (HMRC) upon the completion of a sale. The rates are determined according to a person’s circumstances, as well as the price of the property. The current SDLT threshold for residential properties is £125,000, and it’s only on portions above this value which could see SDLT rates being payable. Buyers who are purchasing property for the first time may be able to pay a reduced amount than they otherwise would.
First-time buyers may pay less or no tax if they are completing their purchase on or after November 22, 2017.
This is provided the purchase price is £500,000 or less, and the buyer, or buyers, are first-time buyers.
This means that anyone who is purchasing the property must not have bought a residence before.
Those eligible will pay no SDLT on the first £300,000 of the property’s value.
For the remainder of the price, which can be up to £500,000, the tax rate is five per cent.
This means that the maximum SDLT payable for a first-time buyer purchasing a house up to and including £500,000, currently stands at £10,000.
Standard rates apply if the total purchase price exceeds the £500,000 figure.
In order to claim First Time Buyers’ Relief, one should enter the relief code “32” in the SDLT return, Gov.uk states.
The first-time buyers relief also applies to shared ownership properties, made on or after November 22, 2017.
This is if the buyer intends to occupy the property as their main residence, and the market value of the shared ownership property is £500,000 or less.
The relief was extended to include these types of purchases, where the purchasers chooses to pay SDLT in stages, from October 29, 2019.
If the property or lease premium or transfer value is up to £125,000, then there is no SDLT to pay.
The next £125,000 – so any portion of between £125,0001 and £250,000, has a two per cent SDLT rate.
This rises to five per cent on the next £675,000 band – which is between £250,001 to £925,000.
The next £575,000 is taxed at a 10 per cent rate – and this is on the portion from £925,001 to £1.5 million.
Should there be any remaining amount, so any portion above £1.5 million, the stamp duty is charged at 12 per cent.