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Stamp Duty Axed for Most First Time Buyers

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Thu 23 Nov 2017

Stamp Duty Axed for Most First Time Buyers

Stamp Duty Axed for Majority of First Time Buyers

The Chancellor announced in yesterday’s Autumn Budget that first time buyers will pay zero stamp duty on the first £300,000 of any home that costs up to £500,000 with immediate effect. This means that on a home worth less that £300,000, first time buyers will pay no stamp duty at all.

The treasury estimates that the move will take 80% of first time buyers out of paying stamp duty all together.

Lee O’Brien, Director at David Lee, commented, ‘This is some much-needed good news for a downtrodden property market. The first time purchase is the hardest step on the property ladder and the stamp duty exemption will be a great help. The last time this was in place it made a real difference in allowing people to enter the market earlier than they may have previously been able. We look forward to helping more first time buyers as they decide to enter the market over the coming year.’

The new system

In England, Wales and Northern Ireland the new stamp duty rates for first time buyers buying properties up to £500,000 are as follows:

-          Up to £300,000 purchase price: 0% stamp duty

-          £300,000.01 to £500,000: 5% stamp duty (on that portion of the purchase price only)

If you buy a first home costing more than £500,000 you won’t benefit from these changes.

Who counts as a first time buyer?

Anyone who hasn’t owned a property before, anywhere in the world, whether bought or inherited.

If you are jointly purchasing a property with someone who isn’t a first time buyer, you won’t qualify for the new rates – you both need to be first time buyers. 

You also won’t qualify for the new rates if you’re buying to let – even if it’s your first purchase.

When does this come into effect?

It’s already in effect – as of 00.01am on 22nd November 2017. The requirement to pay stamp duty is triggered when you complete on the purchase of the property, so if you have exchanged prior to this date but not completed, you will be charged under the new first time buyer system.

The HMRC website has updated the criteria on its Stamp Duty Calculator (https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax) so you can see how the changes may affect you but here is a basic look at what the changes actually mean in real terms. 

Purchase Price

Previous Stamp Duty

New Stamp Duty

Saving

£150,000

£500

£0

£500

£200,000

£1,500

£0

£1,500

£250,000

£2,500

£0

£2,500

£300,000

£5,000

£0

£5,000

£350,000

£7,500

£2,500

£5,000

£400,000

£10,000

£5,000

£5,000

£450,000

£12,500

£7,500

£5,000

£500,000

£15,000

£10,000

£5,000

If you have any questions or concerns, please do not hesitate to contact us and we will be happy to help.