First-time buyer relief and the Stamp Duty Land Tax holiday

Stamp Duty Land Tax (SDLT) first-time buyer relief became available in November 2017 for qualifying buyers paying up to £500,000 for a dwelling in England and Northern Ireland.

Where the relief applies, no SDLT is paid on the first £300,000 of the purchase price. Any amount in excess of £300,000 then attracts SDLT at the standard rate of 5%. Under standard rules, the purchaser of a house for £500,000 would attract SDLT of £15,000, whereas where first-time buyer relief is claimed, this would fall to £10,000, meaning the relief can give a useful £5,000 maximum saving.

The key requirements for the relief to be available are that the buyer is an individual who intends to occupy the dwelling as their only or main residence, and that they have never previously acquired a major interest in a dwelling anywhere in the world. Where there are joint buyers, the relief can only apply where all buyers meet the relevant conditions.

From 8 July 2020 to 30 June 2021, there is an ‘SDLT holiday’, where the standard nil rate band on residential property purchases has been increased from £125,000 to £500,000. During this period, no SDLT has been payable by any individuals (providing they are not subject to a surcharge) on a £500,000 house purchase, meaning first-time buyer relief has not been relevant.

From 1 July 2021, the nil rate band will fall to £250,000 and, from this point, first-time buyer relief will again be relevant. Until 30 September 2021, a £500,000 purchase will attract SDLT of £12,500 under standard rates, and SDLT £10,000 where the relief is claimed, meaning the potential saving will be £2,500. From 1 October 2021, the nil rate band will fall back to £125,000, and the maximum benefit of first-time buyer relief will again be £5,000.

It has not been necessary over the past year to give much thought to whether first-time buyer relief might be available but this will start to change over the coming months. While the key requirements of the relief are straightforward, there are some complexities. Please contact us if you have any queries on the availability of the relief or on SDLT more generally.