Do You Pay Stamp Duty as a First Time Buyer?

What is Stamp Duty Land tax?

Stamp duty is a tax that is charged by the government when a property is purchased. It is a percentage of the purchase price of the property and is paid by the buyer. In the UK, stamp duty is also known as stamp duty land tax (SDLT).

Stamp Duty For First-Time Buyers

If you are a first-time buyer, you may be wondering whether you need to pay stamp duty on your property purchase. The answer is: it depends.

In the past, all property buyers in the UK had to pay stamp duty on properties, regardless of whether they were first-time buyers or not.

However, in 2017, the UK government introduced a new stamp duty relief for first-time buyers. This relief means that first-time buyers can pay less or no stamp duty on their property purchase, depending on the value of the property.

How Much Stamp Duty Do You Pay as a First-Time Buyer?

When you are buying a home, rates are dependent on the price of the property and are organised into bands. Under the current rules, first-time buyers in England and Northern Ireland can benefit from the stamp duty relief if the property’s purchase price is less than £625,000. If the purchase price is over £625,000, the first-time buyer will pay stamp duty at the standard rate.

The amount of stamp duty that first-time buyers need to pay depends on the purchase price of the property. If the purchase price is less than £425,000, the first-time buyer will not need to pay any stamp duty. If the purchase price is between £425,001 and £625,000, the first-time buyer will only pay 5% on the amount above £425,000.

For example, if a first-time buyer is purchasing a property for £450,000, they will need to pay a stamp duty of £1,250. This is calculated as follows:

• 0% on the first £425,000 = £0
• 5% on the remaining £25,000 = £1,250

Residential Property Price Stamp Duty Standard Rates

Homemover Stamp Duty Rates:

• 0-250k = 0, £250,001-£925k = 5%, £925,001-£1,500,000 = 10%, £1,500,001+ = 12%

What are Some Stamp Duty Exemptions?

In England and Northern Ireland, as well as having to buy a property below £425,000, you will be exempt from stamp duty if you are a first-time buyer who has not ever owned a property (including abroad) and you are buying a residential property, which is a home to live in.

Other reasons for being exempt from stamp duty are:

• Property is left to you in a will
• Property is transferred because of divorce or separation
• The property purchased is over £250,000 (or £425,000 if first-time buyer) but the seller agrees to accept a lower offer
• Property is given as a gift with no payment exchanging hands
• The property is a holiday lodge as it is movable
• The property is a houseboat as it will not use land space (unless it has a garden)

How Do You Pay Stamp Duty?

Your conveyancer will usually pay your stamp duty on the day of completion, but it must be paid within 14 days of completion of the purchase. If there is no stamp duty due, a return still has to be filed with HMRC.

First-time Buyers in Scotland & The Land and Buildings Transaction Tax

In Scotland, first-time buyers do not have to pay stamp duty on properties under £175,000. The current Land and Buildings Transaction Tax rates are:

• <£145,000 = 0%
• £145,001-£250,000 = 2%
• £250,001-£325,000 = 5%
• £325,001-£750,000 = 10%
• >£750,000 = 12%

Land Transaction Tax in Wales

• <£225,000 = 0%
• £225,001-£400,000 = 6%
• £400,001-£750,000 = 7.5%
• £750,001-£1,500,000 = 10%
• >£1,500,000 = 12%

In conclusion, it is essential to note that stamp duty rates and thresholds can change over time, so it’s always a good idea to check the current rules before making a property purchase.

Contact Propertyable

If you have any further questions, get in touch with Propertyable today.