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Autumn Budget - Stamp Duty Land Tax (SDLT)

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22 November 2017

It isn’t often that SDLT gets an entire section in one of our Budget booklets but it has been tinkered with more and more in recent years as the Government tied its own hands in respect of other taxes.

The cut of SDLT for first time buyers was the Chancellor’s ‘rabbit out of the hat’ of this Budget. Hidden in the detail was also some welcome news for those who may have been unwittingly subject to the additional 3% charge in certain circumstances.

SDLT relief for first-time buyers

With effect from 22 November 2017 first-time buyers paying £500,000 or less for their home will pay less SDLT. 

Those paying less than £300,000 will pay no SDLT at all, and for properties worth up to £500,000 first-time buyers will pay 5% on the excess over £300,000 only. The maximum saving to be had is £5,000, achievable where the purchase price is between £300,000 and £500,000. 

First-time buyers paying over £500,000 will not see any reduction compared to current rates. 

To qualify as a first-time buyer the purchaser must have never held a freehold or major leasehold interest in a dwelling anywhere in the world. Where property is being purchased jointly, all of the buyers will need to be first-time buyers to qualify for the relief.

Changes to the higher rate of SDLT

There have been numerous issues highlighted with respect to the additional 3% SDLT charge, also known as the ‘second homes tax’. The policy was designed to apply to those who were purchasing investment property, second homes or holiday accommodation. Unfortunately, the writing of the legislation led to the charge arising on transactions not within the spirit of the legislation.

The new measures introduced in the Autumn Budget grant relief in certain circumstances, including where a court order in relation to a divorce, when the taxpayer is prevented from disposing of their interest in the marital home.

Other circumstances covered by the new reliefs include where an individual buys property from their spouse or civil partner, or someone increases their interest in their existing main residence.

While tinkering with the higher rate to insert these reliefs, the legislation will be amended to prevent abuse of the ‘replacement of main residence’ exemption by requiring the entire former residence to be disposed of to a person other than the vendor’s spouse. 

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