The Former Chancellor Alistair Darling in his Budget on 24 March 2010 introduced relief from stamp duty land tax (SDLT) for purchases of residential property at up to £250,000 where the purchaser or all the purchasers are first time buyers and intend to occupy the property as their only or main home. This relief is time-limited to two years.
The new relief is available for residential purchases where the effective date (normally the date of completion) is on or after 25 March 2010 and before 25 March 2012.
(At present the SDLT rate is 1 percent for residential purchases where the consideration is more than £125,000 and up to £250,000)
The starting threshold where the purchaser is a first time buyer of residential property is raised from £125,000 to £250,000.
The relief may be claimed if the following conditions are met.
The subject-matter of the transaction consists wholly of an interest in land which is residential property. Non-residential or mixed use property does not qualify.
The acquisition must be of a major interest in land – that is, a freehold or leasehold interest. In the case of a grant or assignment of a lease, the lease must have at least 21 years to run.
The purchaser or purchasers must intend to occupy the property as their only or main residence
The transaction must not be linked with any others for SDLT purposes unless it is an acquisition of a separate interest associated with the same residence (e.g. a separate lease of a garage).
must not exceed £250,000 for a freehold interest or the assignment of a lease
other than rent (i.e. premium), for the grant of a lease, must not exceed £250,000. The relief does not apply to any tax which is payable on the rent.
must be a person who intends to occupy the property as his or her main residence. This excludes purchases by corporate bodies, partnerships or trustees, with limited exceptions.
the purchaser must not, either alone or with others, have previously acquired a major interest in land which includes residential property, or an equivalent interest in land situated anywhere in the world. This includes previous acquisitions by a financial institution on behalf of a person under an alternative finance scheme .
(This restriction does not apply where the interest acquired was the grant or assignment of a lease with less than 21 years to run)
The relief may not be claimed in conjunction with any SDLT relief apart from those which are in existence for Alternative Property Finance, the market value election for Shared Ownership Leases and the discounted sale price under Right to Buy.
Claiming the Relief
If you are satisfied that you are eligible for Stamp Duty Land Tax First Time Buyer Relief your solicitor will claim it for you on a qualifying purchase – provided that you make your solicitor aware that you believe you are entitled to the relief before completion.
Please note that if you claim the Relief in circumstances where you are not entitled to it you will be liable to pay any Stamp Duty Land Tax due with penalties and interest, and you may be liable to civil and criminal enforcement and/or prosecution. For these reasons you must not claim the Relief unless you are eligible.