What does the stamp duty cut mean for me?
It's great news that the government has cut stamp duty for first time buyers when they purchase a home worth up to £500,000. We look at what this means for you.
November 23, 2017
The cut in stamp duty announced in the Autumn Budget 2017 is something the HomeOwners Alliance first called for in 2013, and is the latest of a long list of reforms where the government has implemented what the HomeOwners Alliance has asked for. We are working night and day to save you money!
The big picture is that the government predicts it will cut stamp duty for first time buyers by about £600m a year in total, and that 95% of first time buyers will save money as a result. But if you and anyone you are buying with are a first time buyer, you will think great, but how much will I save myself, will it really apply to me, and is there a sting in the tail? As always, there are a few devil is in the detail.
How much will the stamp duty cut save me?
If you are first time buyer who is eligible (see below) then you will no longer have to pay any stamp duty up to £300,000, whereas currently you would have to pay up to £5,000. For example, if you currently buy a property for £250,000, you have to pay £1,250 stamp duty – but if you are a first time buyer, that is now zero. If the property is worth between £300,000 and £500,000, you will have to pay 5% of the difference between £300,000 up to £500,000, which is a straight £5,000 saving on what you have to pay at the moment. For details of current rates, see our stamp duty guide.
When does it apply from?
It applies from the day it was announced, the 22nd November. If you had completed before then – bad luck! It is not retrospective.
Am I eligible?
Not all first time buyers will benefit. For a start, it only applies to England, Wales and Northern Ireland (stamp duty in Scotland is controlled by the Scottish government).
You’re eligible if you, and anyone else you’re buying with, are first-time buyers.
There are a few other exemptions, which can mean that even if you consider yourself a first time buyer, it doesn’t apply:
- If you do not intend to live in the property as your main residence
- If you are buying only a minority share of a property, and not the “major interest”. This might apply if you are a first timer buying with someone who already owns somewhere
- If you already own a residential property (which you might have inherited, or got as a divorce settlement) either in the UK or elsewhere in the world. If you have to pay the stamp duty premium for buying second properties, you will not benefit from this exemption
- You cannot benefit if you split the transaction in two, so that you buy one part of the property for less than £500,000 and then buy a second part of it putting the total to over £500,000. You will then need to pay the total amount that would have been due
- If you are buying a shared ownership property, you can only get the relief if you choose to pay the of stamp duty due on the whole property up front
How do I claim it?
Your conveyancer will sort out the relief for you, as they do with the normal stamp duty payment now. The relief will be done through the official land transaction return associated with the purchase.
What should I do with the saving?
Obviously only you can decide, and maybe you desperately need to buy a sofa. But for many, the best long term use would be to increase your deposit, and decrease your mortgage by the same amount.