Preparing to purchase your first home is an exciting time yet it comes with its challenges, especially around understanding Stamp Duty. Luckily Galliard Homes is here to help.
What is Stamp Duty Land Tax?
Stamp Duty Land Tax (SDLT) is a mandatory tax that was introduced by the government in 2003. It is a tax paid by residential property purchasers and is calculated upon purchase price. Property prices are divided into bands with each band accumulating tax at a different rate.
As well as a Standard Rate of Stamp Duty, there are specially calculated rates for First-time Buyers, Second Homeowners and Non-UK Residents.
First-time buyers benefit from first-time buyer stamp duty relief.
What is First-time Buyer Stamp Duty relief?
First-time buyer stamp duty relief is a measure designed by the government to make it easier for people to get on the property ladder.
If you’re a first time buyer in England or Northern Ireland and you’re buying a home up to the purchase price of £425,000, you do not have to pay stamp duty. 5% stamp duty is due on any part of the purchase price between £425,001 and £625,000. These rates are effective on all property exchanges up until 31 March 2025.
Who is classed as a First-time Buyer when it comes to SDLT?
For the purposes of paying SDLT, a first-time buyer is defined as a purchaser who has never previously owned a residential property in the UK or abroad and is purchasing a property to live in as their only or main residence.
If you are buying a property with another individual, both of you must be first-time home buyers to benefit from the first-time buyer SDLT relief. If one of you has previously owned a property, you will not be classed as a first-time buyer.
Those that have either inherited or been gifted a property also do not qualify as a first-time buyer as the rules are based on whether you have previously owned a property rather than whether you have previously bought a property.
It is important to note that if you are buying a home worth more than £625,000 you cannot claim first time buyer stamp duty relief, even if you are a first time buyer. Instead you’ll pay stamp duty at the standard rate. From 01 April 2025, this will reduce to £500,000.
How much Stamp Duty Land Tax will I pay as a first-time buyer?
The amount of SDLT that you pay will depend on the purchase price of the property that you are buying and the date that you are due to exchange.
As a first-time buyer you will not pay stamp duty on the first £425,000 of your property purchase. That means that if your property is purchased for £425,000 or under you will have no stamp duty to pay.
If your property is worth £425,001 to £625,000 you’ll pay 5% stamp duty on the value above £425,000. For example, if you purchase your first home for £500,000, your stamp duty will be £3,750 (5% of £75,000).
From 01 April 2025, the stamp duty relief level will reduce to £300,000.
The easiest way to work out how much SDLT you will pay is by doing an online calculation using our handy stamp duty calculator.
How do I pay Stamp Duty Land Tax?
When purchasing a property where SDLT is payable, you will have 14 days from the date of completion in which to settle the tax. This is usually handled through your solicitor as part of the purchase process, however you are still responsible for ensuring that this is done on time to avoid a fine.
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