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Stamp Duty scrapped for first-time buyers. 80% of first-time buyers are set to pay no Stamp Duty when they buy their home.

Stamp Duty scrapped for first-time buyers - what you need to know

There’s been speculation for weeks as to what the Chancellor would do for first-time buyers in the 2017 Autumn Budget, and now we know. Stamp Duty has been axed for people buying their first home. Good news.

Of course it’s not quite as simple as that. Here’s what we know about the change.

Who will benefit from the cut?

Well, obviously first-time buyers. A person is generally classified as a first-time-buyer if they’re purchasing their only or main residence and have never owned a freehold or have a leasehold interest in a residential property in the UK or abroad.

According to the government, the average first-time buyer will pay zero Stamp Duty, and overall 95% will benefit from the change. However, not all first-time buyers will save money.

The cut is only applied to the first £300,000 of the property's value. Now that should cover most buyers around the country, but it’s less likely to mean those in the South East and London pay nothing. It’s estimated almost 80% of London first-time purchases will be eligible.

It’s also only exempt if the property is being bought for less than £500,000. Over this amount there’s no change to existing rules - you’ll have to pay the full amount. If it’s valued at between £300,000 and £500,000, then you’ll pay 5% on that amount.

Here are a few examples

  • A first-time buyer buying a property valued at £280,000 will pay zero Stamp Duty
  • A first-time buyer buying a property valued at £475,000 will pay £8,750 in Stamp Duty
  • A first-time buyer buying a property valued at £515,000 will pay £15,750 in Stamp Duty

When does the Stamp Duty change happen?

It’s with immediate effect, so from yesterday’s Budget on 22nd November 2017. There’s no information to say it will be backdated for any Stamp Duty payments made before that date, making that scenario very unlikely.

Is it for all of the UK?

The change applies to England and Northern Ireland permanently, and in Wales until April 2018. After April Wales will apply the Land Transaction Tax instead of Stamp Duty, and Scotland already has it’s own powers. It may be that both adopt the policy.

What if you’re buying with someone else?

If you’re buying the property jointly, then both of you need to be first-time buyers. So if your partner, sibling or friend already owns, even if they are selling, then full Stamp Duty will apply. However, you can still take advantage of the Help to Buy ISA or Lifetime ISA to help boost your deposit.

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  • Raj Marya / 15 June 2018

    Does the 'first time buyer' rule apply for reduced stamp duty to husband and wife buying a house in joint names when the total purchase price is 550000 pound sterling? Thanks for your help.