HMRC SDLT: Guide to First-Time Buyers’ Relief on Stamp Duty Land Tax
First-Time Buyers’ Relief from Stamp Duty Land Tax (SDLT)
First-time buyers in the UK can benefit from relief on Stamp Duty Land Tax (SDLT) for certain residential property purchases. This relief aims to make it easier for first-time buyers to enter the property market by reducing the tax burden on their first home purchase. The relief has specific conditions and thresholds that determine eligibility and the amount of tax payable.
- From 23 September 2022 to 31 March 2025, the relief applies to properties costing £625,000 or less, with the buyer intending to live there as their main residence.
- Previously, from 22 November 2017 to 22 September 2022, the threshold was £500,000, which will revert on 01 April 2025.
- Shared ownership buyers paying SDLT on the market value have been eligible for relief since its inception.
- Since 29 October 2018, the relief includes shared ownership buyers paying SDLT in stages, applied retroactively from 22 November 2017.
- First-time buyers purchasing homes for £425,000 or less will pay no SDLT until 31 March 2025; those buying for up to £625,000 will pay 5% on the amount above £425,000.
- A calculator is available on HMRC’s website to help determine SDLT due for eligible first-time buyers.
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Read the original guidance here:
HMRC SDLT: Guide to First-Time Buyers’ Relief on Stamp Duty Land Tax
Introduction to First-Time Buyers’ Relief from SDLT
First-time buyers can benefit from specific relief from Stamp Duty Land Tax (SDLT) when purchasing residential properties under certain conditions. This guidance outlines the key details and requirements for claiming this relief.
Key Details about First-Time Buyers’ Relief
– The relief from SDLT applies to first-time buyers who purchase residential property.
– This relief is available for properties bought between 23rd September 2022 and 31st March 2025, with specific price limits:
– If the purchase price is £625,000 or less, the first-time buyer must intend to live in the property as their main home.
– For property purchases made between 22nd November 2017 and 22nd September 2022, the limit for SDLT exemption was set at £500,000.
– After 1st April 2025, this threshold will revert back to £500,000.
Shared Ownership Properties
– First-time buyers who opt to pay SDLT based on the property’s market value are eligible for the relief since it started.
– As of 29th October 2018, this relief was expanded to include first-time buyers purchasing through approved shared ownership schemes. These buyers are allowed to pay SDLT in stages rather than on the overall market value at once.
– This extension of the relief applies retrospectively from 22nd November 2017.
For further guidance on how first-time buyers’ relief relates to shared ownership properties, you can refer to SDLTM29875+.
Current SDLT Rates for First-Time Buyers
– From 23rd September 2022 to 31st March 2025, first-time buyers purchasing their first home will benefit from the following rates:
– If the property price is £425,000 or less, they pay no SDLT.
– If the property price exceeds £425,000 but is less than or equal to £625,000, they will incur a 5% charge on the amount over £425,000.
– It’s worth noting that before this period, lower thresholds were in place, and these limits will return to the previous levels on 1st April 2025.
Using the SDLT Calculator
– To assist in determining the amount of SDLT due for first-time buyers eligible for relief, HMRC provides a calculator that can be accessed here: https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax.
Legal Framework for the Relief
– The rules governing first-time buyers’ relief can be found in Section 57B and Schedule 6ZA of the Finance Act 2003.
Eligibility and Conditions for Claiming Relief
1. First-Time Buyer Status
– The relief is only available for individuals who have never owned a property before, whether in the UK or abroad.
2. Main Residence Requirement
– The property must be intended to be the buyer’s only or main residence. This means if the buyer already owns another property, they do not qualify.
3. Property Type
– Only purchases of residential properties are eligible. This includes houses, flats, and certain types of shared ownership properties.
4. Purchase Price Limits
– As stated previously, the price limits in place during specific timeframes apply to determine eligibility for the relief. Buyers should ensure the total price meets the relevant threshold to qualify.
5. Claim Process
– When completing the SDLT return, buyers must indicate they are first-time buyers when prompted. This ensures the relief is accurately applied to their transaction.
6. Shared Ownership Specifics
– For those buying shared ownership properties, buyers need to confirm whether they are opting to pay SDLT on the full market value or via staged payments. This choice impacts eligibility for the relief.
Practical Examples of SDLT Relief
– Example 1: A first-time buyer purchases a home for £400,000.
– Since the price is below £425,000, the buyer pays no SDLT, benefiting fully from the relief.
– Example 2: Another first-time buyer purchases a property for £500,000.
– They would not qualify for relief as the price exceeds the £425,000 limit but falls below £625,000. They would pay 5% on the amount over £425,000, which is £75,000. Therefore, their SDLT would be £3,750.
– Example 3: A first-time buyer purchases a shared ownership property valued at £250,000 with a 25% share.
– If they choose to pay based on the market value and the property is their main residence, they might be entitled to the relief depending on the cumulative price of the share.
Important Considerations
– Buyers need to keep in mind that SDLT relief can significantly impact the overall cost of purchasing a home.
– Proper documentation and evidence of first-time buyer status are required to successfully claim the relief.
– Awareness of the timelines regarding price thresholds is essential for potential buyers planning their purchases around these dates.
Additional Resources
For further information on first-time buyers’ relief, including definitions and detailed processes, more information is available through official HMRC resources and guidance documents.
Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: Guide to First-Time Buyers’ Relief on Stamp Duty Land Tax
