First-time buyer relief from stamp duty – key points

At Lend4, we know that buying your first home can be a potentially daunting – and expensive – experience, but did you know that first-time buyers now save hundreds or thousands of pounds because of recent changes to stamp duty relief?

The good news is that all first-time buyers in England and Northern Ireland are able to save up to £5,000 because no stamp duty is payable on properties worth up to £300,000.

If you’ve never owned a residential property in the UK or abroad before, you automatically qualify for this exemption when your solicitor submits the purchase documentation to HMRC.

So, what exactly is stamp duty?

If you buy a residential property in England or Northern Ireland, you have to pay stamp duty (or Stamp Duty Land Tax / SDLT to give it its full title) on any purchase over £125,000 or £40,000 if this is not your first property purchase. This means that you’re obliged to pay a percentage of the purchase price of your new home to the taxman.

Is it possible to claim stamp duty relief as a first-time buyer?

The good news is that first-time buyers are eligible for stamp duty relief on properties up to the value of £300,000 if you reside in England or Northern Ireland or on homes costing £175,000 or less in Scotland.

To stay on the right side of HMRC, to gain stamp duty relief as a first-time buyer you must never have owned or had any stake in a residential property either in the UK or overseas – this includes both freehold and leasehold properties.

How much is stamp duty?

The amount of stamp duty that you’ll pay depends on the value of the property you’re buying as well as its location so it’s worth considering these things when searching for your ideal first home.

England & Northern Ireland

If you live in England or Northern Ireland and you are purchasing a property up to the value of £300,000 you’ll be eligible for stamp duty relief meaning you’ll pay no tax on your new home. If your house is worth between £300,001 and £500,000, a stamp duty levy of 5% would be due on the amount between £300,001 and £500,000.

VALUE OF PROPERTY STAMP DUTY RATE FOR FIRST-TIME BUYERS (ENGLAND & NORTHERN IRELAND
Up to £300,000 0%
Over £300,000 to £500,000 5%
£500,000 and over Normal stamp duty rates

If your property is valued above £500,000 then you pay normal stamp duty rates whether you’re a first-time buyer or not.

 

Scotland

In Scotland, where stamp duty is known as Land and Buildings Transaction Tax (LBTT), then you receive first-time buyer relief on any property up to £175,000. For any properties above this value, you pay normal LBTT rates. If you’re a first-time buyer in Scotland, check out our handy guide below to find out how much tax you’ll be paying on your first home:

PURCHASE PRICE OF THE PROPERTY LBTT RATE FOR FIRST-TIME BUYERS (SCOTLAND)
Up to £175,000 0%
£175,001-£250,000 2%
£250,001-£325,000 5%
£325,001-£750,000 10%
£750,001 and over 12%

Wales

In Wales, where the equivalent of stamp duty is called Land Transaction Tax (LTT), there is no specific tax relief for first-time buyers unfortunately. However, no Land Transaction Tax is payable on properties up to the value of £180,000 whether it’s your first home or not.

Check out our handy guide below to find out how much LTT is payable based on the value of your property:

PURCHASE PRICE OF PROPERTY LTT RATE FOR FIRST-TIME BUYERS (WALES)
Up to £180,000 0%
£250,001-£400,000 5%
£400,001-£750,000 7.5%
£750,001-£1,5m 10%
£1.5m and over 12%

Can I claim stamp duty relief if I inherited a property?

Unfortunately, if you inherited a house, you wouldn’t be technically classed as a first-time buyer making you ineligible for stamp duty relief. Depending on your circumstances though, you may be entitled to other forms of property tax relief. Get in touch with the friendly team at Lend4 today on 03330 161 444 or email info@lend4.co.uk to find out what options may be available to you.

Can I claim stamp duty relief if I have a shared ownership property?

From 2018, first-time buyers taking advantage of shared ownership schemes can claim stamp duty relief on the first £300,000 of any new home that costs up to £500,000. This saving applies to any property purchased from 22 November 2017 and this is backdated.

Shared ownership stamp duty relief is a great way to save money on your first home so, if you purchased your property on or after this date, then get in touch with us today and our team of experts will happily guide you through the process.

Can I claim stamp duty relief if I’m purchasing a house with someone else?

The good news is that if you’re married and planning on purchasing your first home with your partner, you can claim stamp relief duty providing you’re both eligible first-time buyers.

Couples who aren’t married can also reduce their stamp duty tax bill providing the only person included on the property deeds is a first-time buyer.

This is a great way to save money on your stamp duty bill but bear in mind the maximum saving on a property purchase is still £5,000 regardless of the number of people named on the mortgage deed. And, of course, if the mortgage application is only in one buyer’s name then the application will only be considered on that person’s individual income potentially impacting on how much you can borrow.

Can I claim stamp duty relief on a buy-to-let property?

Unfortunately, it’s not possible to claim stamp duty relief if you’re purchasing a buy-to-let whether you’re a first-time buyer or not. However, in certain circumstances it’s possible to let specific rooms in your house and claim stamp relief on any rental income generated.

When is stamp duty due to be paid?

Once you’ve completed the purchase of your home, you have 30 days to pay stamp duty to HMRC. Of course, if you’re eligible for stamp duty relief as a first-time buyer based on our guide above, then your solicitor should be able to submit a return proving your tax relief entitlement.

Do you need advice on stamp duty relief as a first-time buyer?

If you’re unsure of how much stamp duty relief you may be entitled to as a first-time buyer, get in touch with Lend4 today on 03330 161 444 or email info@lend4.co.uk and our experts will guide you through the process and happily answer any questions you may have.