Looking to get a foot on the property ladder this year? There's some good news. Chancellor of the Exchequer Phil Hammond made a number of changes to housing taxes in the latest autumn budget, including new stamp duty relief for first-time buyers. Here's everything you need to know about what it is and how you can qualify for it.
A brief introduction to stamp duty
Stamp duty (or 'stamp duty land tax', to give it its proper name) is an extra fee that buyers pay when they purchase a property in England, Wales or Northern Ireland. Scotland has a separate but similar stamp duty system, called 'land and buildings transaction tax'. It's calculated as a percentage of the sale price, with percentages rising in line with the value of the property.
Tax-free up to £300,000
Stamp duty is currently paid on the value of a property over £125,000. First-time buyer relief extends the value to £300,000, after which you'll pay the standard 5% up to £500,000. According to the Halifax First-Time Buyer Review, the average price of a first property in the UK is £207,693 (£410,000 in London) – well under the cut-off point.
Which properties apply?
Relief is available if the home is going to be your main residence – e.g. if you're not buying the property to rent out. It only applies to domestic buildings, so you also can't get a discount if your first property purchase happens to be a shop. What's more, it has to be a single dwelling, so you can't nip out and buy yourself a block of flats. To claim your relief, you have to enter code '32' into your land transaction return form.
Scotland and Wales
There's a bit of bad news for those planning to buy north of the border – this relief doesn't apply in Scotland, as the country operates a different tax system. If you're purchasing your first property in Wales, act quickly – SDLT is being replaced by a 'land transactions tax' on 1 April 2018 and so this particular relief will no longer apply.