Stamp Duty Land Tax – First time buyers’ tax relief
9th November 2022
Laura Wylie See profile
Few of Kwasi Kwarteng’s announcements remain from his September mini budget. One which does is the increase in the Stamp Duty Land Tax (SDLT) threshold for residential property acquisitions, which was doubled to £250,000. Anyone completing a purchase on or after 23 September 2022 will save £2,500 compared with transactions that completed prior to that date.
Another change was to First Time Buyers’ Relief. No SDLT will be payable on property purchases up to £425,000 (previously £300,000) with the rate for purchases between £425,001 – £625,000 (previously £325,001 – £500,000) restricted to 5%. For anyone hoping to qualify for the relief, it will be important to ensure that acquisitions are correctly structured, particularly if family are providing financial assistance.
There are four main conditions that must be met for First Time Buyers’ Relief:4
- The buyer must not have previously owned a legal or beneficial interest in freehold or leasehold residential property anywhere in the world. This includes acquisitions by inheritance or gift. If more than one buyer, they must all meet this condition.
- The purchase must be of a single dwelling and not include a non-residential element, e.g. a house with agricultural land.
- The buyer must intend to occupy the property as their main residence.
- The purchase must not be linked to any other land transactions. If there is a linked transaction, it can qualify provided it is relevant to the purchase of the dwelling, e.g. a subsequent purchase of a garden area. However, if the total consideration for the dwelling and garden then exceeds £625k, relief will be withdrawn completely with additional SDLT payable.
With regard to points 1 and 3, it will be necessary for anyone wishing to claim First Time Buyers’ Relief to ensure they are the buyer and that any person offering financial support does so by way of a gift or loan, rather than in return for an interest in the dwelling.