Official guidance has now been published on how to claim relief from Stamp Duty Land Tax (SDLT) if you are a first time buyer. The relief was announced in the Chancellor’s budget on 22 November last year.
First time buyers purchasing their first home for £300,000 or less will pay no SDLT. Where the purchase price is over £300,000 but under £500,000 they will pay 5% on the amount over £300,000. Those buying a home over £500,000 will not be able to claim the relief. The relief applied with immediate effect to transactions with a completion date of 22 November 2017 or thereafter, including those which completed that day prior to the announcement being made.
HMRC has published guidance notes on the new relief with more information about claiming the relief and the requirements in doing so.
Definition of a First Time Buyer
To qualify as a first time buyer, the purchaser must not have previously acquired a major interest in a dwelling or land situate anywhere in the world. This includes acquisitions by inheritance or gift. Acquisition as a trustee will not exempt a purchaser from claiming the relief but if they are a beneficiary of a trust they will not be able to claim. Purchasers who own non-residential or mixed-use property will still be able to claim so long as this property did not include a dwelling.
If you are buying your first home with a partner, both of you must be first time buyers in order to claim the relief and you must intend to occupy the dwelling as your main residence. Only individuals can claim the relief, if the purchaser is a company then the relief will not be available.
Definition of a Dwelling
The meaning of dwelling includes a building or part of a building that is used or can be used as a single dwelling, or is in the process of being constructed or adapted for use as a dwelling. Holiday homes and furnished holiday lettings are included as dwellings if they are suitable to be used as a dwelling. For the purpose of this relief residential accommodation for school pupils and purpose-built student accommodation for the armed forces are excluded under the definition of dwelling
Interaction With Other SDLT Rules
- Higher rates for additional dwellings – where a transaction is liable to higher rates of SDLT the relief cannot be claimed.
- Shared ownership – where ‘market value’ treatment has not been applied or has not been opted for, relief cannot be claimed in respect of any of the transactions involved in shared ownership schemes.
- Alternative finance arrangements – relief may be claimed but the entitlement to relief is determined in relation to the ‘person’ who is entitled to occupy the property as a result of the arrangements, not in respect of the financial institution that is the purchaser.
- To read the note in full published by HMRC please click here.