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Stamp Duty Land Tax

Potts & Co Accountancy

Relief For First-Time Buyers

By | Budget Update, HMRC, Potts & Co Accountancy & Business Advice News, Property, Stamp Duty Land Tax

Stamp duty land tax (SDLT) is payable at rates ranging from 2% to 12% when you buy a residential property for £125,000 or more. Higher rates apply to the purchase of second homes and property acquisitions by companies.

If a residential property worth up to £500,000 is purchased by one or more first-time buyers, the first £300,000 of the purchase price is exempt from SDLT. This exemption applies for property purchases completed on and after 22 November 2017.

Many younger people buy their first home through a shared ownership scheme. In such cases, the buyer can choose whether to pay SDLT on the entire market value of the property or only on the share of the property they have acquired. If they elected to pay the tax on the full market value they could claim the exemption from SDLT, otherwise, the exemption for first-time buyers did not apply.

The law will be changed to allow the exemption for first- time buyers to apply even where they elect to pay SDLT only on the initial share acquired, as long as the market value of the whole property is no more than £500,000. This change in the rules will be back-dated to cover acquisitions completed on and after 22 November 2017.

Where excess SDLT has been paid since November 2017 it can be reclaimed by amending the SDLT return before 28 October 2019.

Scotland and Wales impose their own versions of SDLT for properties located in those countries.

Potts & Co - Accountancy & Business Advice

SDLT Help For First-Time Buyers

By | Budget Update, Personal Tax, Potts & Co Accountancy & Business Advice News, Stamp Duty Land Tax

First-time buyers can now take advantage of a permanent exemption from stamp duty land tax (SDLT) when purchasing a property which they intend to occupy as their main home.

The exemption removes the SDLT charge for the first £300,000 of the purchase price, for deals completed on and after 22 November 2017. If the purchase price is more than £500,000 the exemption doesn’t apply and the normal SDLT rates will be charged.

All the buyers must qualify as first-time buyers, so none of them can have owned a residential property or any interest in a home, located anywhere in the world. Parents who help their children fund the purchase of a property must not let their names be included on the deeds, as that will block the SDLT exemption if the funding parent has previously owned a home.

This exemption doesn’t apply to properties in Scotland, which are subject to Land and Buildings Transaction Tax. It will only apply to purchases of homes in Wales until 31 March 2018, as the Welsh Land Transaction Tax applies from 1 April 2018.

Potts & Co - Accountancy & Business Advice

Reclaiming the SDLT supplement

By | Potts & Co Accountancy & Business Advice News, Stamp Duty Land Tax

If you have bought a house since 1 April 2016 you may have paid a stamp duty land tax (SDLT) supplement of 3% on the entire value. Generally, the supplement is not payable where your main home is replaced, even if you end up owning more than one residential property.

However, where the new main home is purchased before the former is sold, the supplement is initially payable. As long as the sale of the old main home is completed within three years of the purchase, the supplement can be reclaimed. Could you be eligible to claim a refund of SDLT?

The repayment can be claimed either online or by post using form SDLT16. You will need the SDLT purchase reference.

The claim must be made by the later of:

• three months from the completion of the sale, and
• twelve months from the SDLT return filing date (which is 30 days from the completion of the purchase).

If these deadlines are missed, the opportunity to reclaim the SDLT supplement will be lost.
Slightly different rules apply in Scotland where land and buildings transaction tax is levied in place of SDLT. From 1 April 2018 Wales will have its own version of SDLT, with different rates and thresholds, so if you are looking to buy a property in Wales it may be best to complete before next April.