Changes To Stamp Duty – What Do They Mean?
From 22nd November 2017, anyone buying their first home priced up to £300,000 will not pay stamp duty. Stamp duty relief (also known as SDLT) will also be available on the first £300,000 of the purchase price of properties up to £500,000. This is largely aimed at reducing costs for first-time buyers in highly-priced areas, such as London.
What Is Stamp Duty?
Stamp Duty Land Tax (SDLT) is payable to the Inland Revenue on purchases and leases of certain values. This applies to property or land in England, Wales or Northern Ireland and applies to those over a certain price.
When Is Stamp Duty Paid?
To avoid penalty or interest charges, SDLT must be paid within 30 days of the ‘effective’ land transaction date and this is usually when the contracts have been signed.
Why has the government abolished SDLT on homes under £300,000?
With the number of renters growing to almost one fifth of all households, home ownership fell to its lowest level in more than 30 years. Indeed, back in 2015, in partnership with Shelter, KPMG produced a report that identified the need to build 250,000 new homes per year. Read more.
By abolishing the lower limit for Stamp Duty tax, the Chancellor hopes to stimulate the property market. Mr Hammond suggested that axing the lower limit would “help 80% of first-time home buyers get onto the housing ladder”.
How Will The Change Affect First-Time Buyers Across The UK?
The change applies in England and Northern Ireland, and in Wales, but only until March 2018. Scotland has an independent system of land tax which will not change.
The portion of the house price between £300,000 and the £500,000 price ceiling will be taxed at 5%. That means if your new home costs £500,000, you will pay £10,000 in duty, a saving of £5,000 under the old rules.
Note also, that if a couple are buying and only one is a first-time buyer, they will not qualify for the new tax break.
A Good Move?
The reaction to the news has been mixed, so time will tell.
On the one hand, saving on stamp duty tax is a big help to the young, but funding a deposit remains their biggest major obstacle. Furthermore, there are strong indicators (as the OBR has stated) that this tax cut will force house prices up.
In the meantime, if you have any property queries or issues you’d like to discuss please get in touch, we’re here to help.
Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.