The introduction of a stamp duty discount for first-time buyers in the Autumn Budget 2017 is generally welcomed. Simon Whittaker, CFO, looks at what this means practically, for those looking to take their first steps onto the property ladder.
George Osborne’s “experiment” with a simple graduated system of Stamp Duty Land Tax (SDLT) has lasted less than three years. Whilst there will undoubtedly be some dissenting voices, the introduction of a first-time buyer’s discount for stamp duty is generally welcomed.
With immediate effect, first-time time buyers will pay no stamp duty on properties costing up to £300k. Discounts are applied on properties costing over £300k up to £500k. Should a property cost more than £500k, the entire discount is lost.
The practical effect of the change is shown below:
|Purchase price||Normal rate||First-time buyer|
Thus, the maximum stamp duty saving for first-time buyers is £5,000 which will apply on all purchases between £300,000 and £500,000. This will doubtless be seen as a small, but nevertheless welcome, piece of assistance to help people get on the housing ladder.
BEWARE! £5k difference between properties costing £500k and £501k
Beware of the “trap” of the £5,000 hike in stamp duty for first time buyers paying just over the £500,000 top limit for this relief (shown above). And it comes at the cost of adding a few more pages to our already massively bloated tax code!
The new rates apply to properties purchased in England, Northern Ireland and Wales. Scotland imposes its own Land and Buildings Transaction Tax. Bear in mind that in Wales, under devolved powers from 1 April 2018, SDLT will be replaced by Land Transaction Tax – the first Welsh-only tax in almost 800 years, according to Property Industry Eye.