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  • Hammond scraps stamp duty for first-time buyers - are you eligible?
News 2
27
Nov
Hammond scraps stamp duty for first-time buyers - are you eligible?
News

Following the Autumn Budget of 22nd November 2017, tax relief has been granted by the Government in respect of the Stamp Duty Land Tax payable on completion for eligible first time buyers. Part 4 of the Finance Act 2003 (stamp duty land tax) was amended to effect such changes, as outlined below.

Part 1 of Schedule 6ZA outlines the eligibility for relief. Firstly, the property that is being purchased must be a single residential dwelling[1] worth £500,000 or less[2]. Secondly, the purchaser must be a first time buyer who intends to occupy the property as their only or main residence.[3] A first time buyer is defined as ‘an individual(s) who has never owned an interest in a residential property in the United Kingdom or anywhere else in the world and who intends to occupy the property as their main residence’.[4] Thirdly, the transaction must not be linked to another land transaction.[5]

The relief available is outlined in Part 2 of Schedule 6ZA and applies in two stages, as follows[6]. For properties with a value of £300,000 or less, there is no Stamp Duty Land Tax to pay. The remaining portion (up to the value of £500,000) is chargeable at 5%. Property worth £500,001 or more falls outside the legislation and Stamp Duty Land Tax would be payable at the usual rate.

It would appear from the wording of the legislation that if a couple were looking to purchase a property and only one of them was a first time buyer, they would not be eligible for such tax relief and Stamp Duty Land Tax would be payable at the usual rate. Similarly, a first time buyer looking to purchase a buy-to-let property would not be eligible for the tax relief under the current legislation as they would not be occupying the property as their main residence.

Whilst the effectiveness of the new legislation has not yet been tested, it certainly seems to be a positive step for first time buyers and has the potential to save eligible purchasers up to £5,000.

If you would like further information on whether you are eligible for Stamp Duty Land Tax relief please contact our Residential Property team.


[1] This is further defined in section 9 of Schedule 6ZA, Part 3

[2] Sections 1(2) and 1(3) of Schedule 6ZA, Part 1

[3] Sections 1(4) of Schedule 6ZA, Part 1

[5] Sections 1(5) and 1(6) of Schedule 6ZA, Part 1

[6] Section 4 of Schedule 6ZA, Part 2

Before relying on this commentary please read the Reliance on information posted section in our Terms of Website Use in our Legal section. Please note that specialist advice should be taken in relation to any specific queries and the information above is provided for general information purposes only.

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