Stamp duty land tax (SDLT, also known simply as ‘stamp duty’) is a tax you might have to pay when buying a residential or commercial property in the UK. The rates of SDLT can be changed by the government of the day, for example when the government releases the budget for the year. This blog will only focus on stamp duty applying to the purchase of freehold residential properties only and it is advisable to speak to a tax expert should you have any queries in respect of your stamp duty liability on a purchase.

Currently, there is no stamp duty payable for purchases of up to £250,000 whether you are a first-time buyer or moving house.  If the property is a second home, or being purchased in the name of a company, this is not the case and different rates of stamp duty would apply.  For a first-time buyer, purchasing for more than £250,000, stamp duty is charged incrementally on the purchase price.

There is a relief available to first time buyers called ‘First Time Buyers Relief’ (FTBR). FTBR was introduced in November 2017 to help those who don’t own property get on the ‘property ladder’ in light of rocketing UK house prices, provided the purchase price is less than £500,000 and the property will be your main residence i.e. your permanent home. Perhaps with the more recent stratospheric increase in house prices, FTBR is more important than ever.

FTBR means if you have never owned or had any other interest in any other property (anywhere in the world) buyers will not be liable for a stamp duty payment on the first £425,000 of the purchase price and thereafter a rate of 5% is applied up to £625,000. This is more favourable than the regular rates. This seems like good news, however if you are lucky enough to be able to purchase your first property worth in excess of £625,000, the buyer cannot benefit from the relief, and it is not claimable – in which case the buyer will be liable for the regular stamp duty rates.

The government have announced the intention that this rate of FTBR will remain in place until 31 March 2025 at which point the rates could change again – initially the 0% rate was applicable for first time buyers up to £300,000 before being increased to £425,000 on 23 September 2022.

The government have made it clear this increase in FTBR is only a ‘temporary relief’ and it is unclear whether the rates will fall to what they were previously at the expiry of this temporary relief.

If you are buying your first home or would like further information, please contact Jenny Austin by email or on 01494 893 546.