Autumn Budget 2017 – Changes to Stamp Duty

One of the ‘big news’ items to come from the budget on 22nd November 2017 was a reduction in Stamp Duty for first-time buyers.

So, what are the changes?

First-time buyers will no longer pay Stamp Duty on properties worth up to £300,000. If the property is worth between £300,000 and £500,000, you will pay no Stamp Duty on the first £300,000, but will pay the standard 5% on the remaining amount.

For example, if the property is worth £450,000, you will pay no Stamp Duty on the first £300,000 and 5% on the remaining £150,000. Under the old system, first-time buyers would pay £12,500 in Stamp Duty on this £450,000 property. The new system means they will pay just £7,500.

What is a first-time buyer?

To be classified as a first-time buyer you must never have owned a residential property in the UK or abroad. This includes freeholds and interests in leaseholds. You must also be purchasing your only or main residence. This means first-time buyers cannot get Stamp Duty relief on buy-to-let properties.

What dates does this affect?

Stamp Duty is applied after completion of a sale. So, if you qualify as a first-time buyer, the property is under £500,00 and the deal was finished on or after 22 November, you will benefit from these changes to Stamp Duty.
This includes reserves on new build properties, where you have agreed to buy the property, but the deal has yet to be completed.

I own the house I live in and want to help my son buy a flat. If we get a joint mortgage, what rate of stamp duty will apply given that he doesn’t currently have a property? As with many parents wanting to help their kids on the property ladder; If you get a joint mortgage with your son and become the joint owner of the flat, your son will not be able to claim the first-time buyer’s stamp duty land tax (SDLT) relief announced in last week’s budget, and the higher rate – which is the standard rate plus 3% – will apply to the whole of the purchase price.

Can I get Stamp Duty relief if I am purchasing a buy-to-let property? No. To be a first-time buyer you must be purchasing a property you intend to live in. You can however, sub-let a spare room as long as you intend to live there. As with all of our tax tips and web pages this information is summarised and of a general nature.

As with all of our tax tips and web pages this information is summarised and of a general nature. If you would like specific advice, please Contact us Contact us