Whilst the rest of us play the ‘will he, won’t he?” game with Rishi Sunak regarding the possible extension, or not, of the Stamp Duty holiday after the end of March deadline, there is good news for first time buyers.
From April 1 2021, first-time buyers will pay no Stamp Duty Land Tax (SDLT) on their purchases up to £300,000, and five percent Stamp Duty on the portion from £300,001 to £500,000. As an example, the tax due on the purchase of a property by a first-time buyer for £450,000 would be £7,500 – 0% on the first £300,000 of the purchase price and 5% on the remaining £150,000.
To be eligible for the relief, the first-time buyer must intend to occupy the property as their only/ main residence. It also applies to purchases through approved shared ownership schemes who do not elect to pay SDLT on the market value of the property but instead pay SDLT in stages.
Purchasers of properties who are not first-time buyers will revert to normal SDLT rates from 1 April 2021 unless there is a last-minute extension of the holiday e.g. no Stamp Duty for properties under £125,000, 2% from £125,001 to £250,000 and 5% from £250,001 to £925,00. etc
It is worth noting that stamp duty and the calculation depending on circumstances is a self-assessment tax, although your lawyer will submit the return on your behalf as your agent, generally for mortgage lending purposes. It is down to the individual to calculate the appropriate tax and place their lawyer in funds in time for completion for the sum due. You must be sure on the tax applicable at the time of instructions however for clarity.