HMRC SDLT: Guide to Claiming First-Time Buyer Relief on Land Transaction Returns
SDLTM29895 – Claiming the Relief
This section explains how to claim relief on a land transaction return, specifically for first-time buyers and shared ownership schemes. It outlines the process of entering the correct code and using online tools to calculate tax liabilities.
- Relief must be claimed in a land transaction return or its amendment.
- First-time buyers should enter code 32 in the reliefs field of the return.
- Online submissions calculate tax using special rates for first-time buyers.
- For shared ownership, use the HMRC Stamp Taxes calculator to determine SDLT liability.
- Populate questions 1.14, 1.24, and 1.25 on the online SDLT return with calculator figures.
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Read the original guidance here:
HMRC SDLT: Guide to Claiming First-Time Buyer Relief on Land Transaction Returns
Understanding SDLT Relief for First-Time Buyers
When buying a property, it’s important to know how to claim relief from Stamp Duty Land Tax (SDLT), especially if you are a first-time buyer. This relief can significantly reduce or even eliminate the amount of tax you need to pay. Below, we explain how to claim this relief, what you need to do, and offer guidance on specific scenarios, such as buying through shared ownership schemes.
How to Claim SDLT Relief
To claim relief from SDLT, you need to do it through either:
– A land transaction return
– An amendment to that return
This is a key step when you are purchasing a property and seeking any available tax benefits.
Claiming Relief for First-Time Buyers
If you are a first-time buyer, the process of claiming relief is straightforward. You do not need to provide any additional information when making your claim, but you must do the following:
– Enter code 32 in the reliefs field of the return.
This code identifies that you are claiming first-time buyer relief.
Online Submission of the Return
If you complete and submit your land transaction return online, the system is set up to calculate the amount of tax you need to pay based on the special rates applicable to first-time buyers. This makes the process easier and ensures you are accurately assessed for tax.
Relief for Shared Ownership Purchases
If you are purchasing a property through an approved shared ownership scheme and want to claim SDLT relief, you need to follow these steps:
1. Use the HMRC Stamp Taxes calculator on the HMRC website to calculate your SDLT liability.
2. Input your figures from the calculator into your online SDLT return. You will need to fill out:
– Question 1.14
– Question 1.24
– Question 1.25
3. Again, ensure that you enter code 32 into the reliefs field of the return.
This process ensures that you properly claim your relief while using the shared ownership scheme.
Important Information on Shared Ownership
In shared ownership, you buy a share of the property and pay rent on the remaining share. It is a popular option for first-time buyers because it lowers the initial cost of buying a home. When claiming relief for SDLT on shared ownership properties, it is vital that you calculate the correct amount of tax due, taking into account the proportion of the property you are purchasing.
When you use the HMRC Stamp Taxes calculator, make sure you have all the relevant figures, including:
– The purchase price of the share you are buying
– Any specific considerations related to the shared ownership agreement, such as the rent due on the remaining share
These details are essential to ensure that you are claiming the correct amount of relief and paying the right amount of tax.
Eligibility for First-Time Buyer Relief
To qualify for first-time buyer relief, you must meet the following criteria:
– You must be purchasing your first home.
– The property must not exceed a specific value (currently, this is set to £425,000 for properties purchased as a whole).
If you are buying a shared ownership property, the value of the home must not exceed £625,000. This is important for determining your eligibility.
Make sure to check for any updates or changes to these limits on the official HMRC website, as they may change over time.
The Benefits of SDLT Relief
Claiming SDLT relief can offer several advantages for first-time buyers, including:
– Reduced initial costs when purchasing a home.
– More affordable monthly payments, since a lower SDLT means you might have more money available for your mortgage deposit or other purchase-related costs.
– Support in making home ownership more accessible, especially for younger buyers or those with limited savings.
It is essential to take advantage of any available reliefs, as they can greatly assist you in entering the property market.
Examples of Claiming Relief
Let’s consider a couple of examples to illustrate the process:
1. Example of a First-Time Buyer:
– Sarah and John are buying their first home for £400,000.
– They complete their land transaction return online and enter code 32 in the reliefs field.
– Their SDLT is calculated automatically, and they qualify for first-time buyer relief, so they owe no SDLT.
2. Example of Shared Ownership:
– Emma is purchasing a 50% share of a property valued at £300,000 through an approved shared ownership scheme.
– She first uses the HMRC Stamp Taxes calculator to establish her SDLT liability, which calculates based on the value of her share (£150,000).
– After entering the appropriate figures into the online return, Emma also ensures she enters code 32 in the reliefs section.
– As a first-time buyer, she is entitled to claim relief on her purchase.
Amending Your Return
If you have already submitted your land transaction return without claiming the appropriate relief, you can still amend it. Here’s how:
1. Locate your original submission.
2. Make the necessary adjustments to include the claim for relief.
3. Enter code 32 in the appropriate section.
4. Submit the amended return to HMRC.
This allows you to correct any errors and ensures that you receive the relief you were entitled to from the start.
Further Resources
It is always a good idea to stay informed and check for any updates or additional details regarding SDLT and reliefs for first-time buyers. The HMRC website contains a wealth of information and resources that can assist you further. If you have any specific questions or scenarios, do not hesitate to reach out for professional advice or consult the relevant sections on the HMRC website.
For more detailed assistance, individuals may also consider speaking to a property solicitor or a tax advisor who specializes in SDLT-related matters.
By understanding the process of claiming SDLT relief and the specifics surrounding first-time buyers, you can navigate the property purchase process with greater confidence and potentially save money along the way.
Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: Guide to Claiming First-Time Buyer Relief on Land Transaction Returns
