3 April 2018

First Time Buyer Relief

Please note that as of 1st April 2018, this Relief does not apply to properties in Wales.

A new relief for Stamp Duty Land Tax has been introduced for first time buyers where completion occurs on or after 22nd November 2017. The relief is called First Time Buyer Relief (“the Relief”).

The Relief will apply where the purchase price is no more than £500,000. First Time Buyers purchasing their first home for £300,000 or less will pay no Stamp Duty Land Tax but when the purchase price exceeds £300,000 they will pay 5% Stamp Duty Land Tax on the value of the property above £300,000.

A first time buyer is defined as a person who has not previously acquired a major interest in a dwelling or an equivalent interest in land situated anywhere in the world.

What does that mean? The name of the Relief is misleading as it does not necessarily mean what one might expect it to mean. If you have been given a dwelling, even if that dwelling is a gift by will or intestacy, you will not be classed as a first time buyer for the Relief and it will not be available to you, even if you have never actually purchased a property. Relief will also be denied if the individual has owned a non-residential or mixed-use property.

If the transaction would result in a surcharge i.e. a higher rate of Stamp Duty Land Tax payable then the Relief may not be claimed even if you have never purchased a property before.

For example, assume a husband and wife would like to purchase a new property to live in together. The husband has never bought a property before and has never owned a beneficial interest in a property. However, the wife has a flat which is worth £150,000. In an effort to obtain the Relief, the husband decides to buy the property in his sole name. Unfortunately, due to the way that Stamp Duty Land Tax rules work, this transaction would attract a surcharge and therefore the husband would lose his entitlement to claim the Relief.

The rules are very complex and we recommend that you contact a solicitor or tax specialist if you are not sure whether the Relief will apply to you.