Business Law: Andrew Nicholson highlights welcome news on Stamp Duty Land Tax
PUBLISHED: 16:56 12 December 2017 | UPDATED: 16:56 12 December 2017
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Welcome news came in the Budget for first time buyers of residential properties when the Government announced that there would be no Stamp Duty Land Tax (SDLT) payable by those who purchased a residential property for £300,000 or less.
First time buyers wishing to purchase a property for between £300,000 and £500,000 will now only pay SDLT at 5% on that part of the purchase price which exceeds £300,000. However, first time buyers who purchase a property for more than £500,000 will not be entitled to any relief and will pay SDLT at the normal rates.
The effective date of a property purchase for this purpose is normally the completion date. Under devolved legislation, the relief will not apply in Scotland and is only to apply in Wales until April 1, 2018 when Wales will be putting in place its own SDLT regime.
First time buyers are defined as individuals who have never owned an interest in a residential property either in the UK or, indeed anywhere else in the world, and intend to occupy the property as their main residence. The new relief should be very welcome and, by way of example, the purchase in Greater London by a first time buyer at £450,000 will secure an SDLT saving of £5,000.
There have been some other amendments made to the higher rates of SDLT so that, with effect from November 22, 2017, relief from the additional 3% charge on the purchase of extra residential properties will apply where:
•A spouse or civil partner buys a property from the other spouse or civil partner;
•A divorce-related court order prevents someone from disposing of their interest in a main residence;
•A deputy buys property for a child subject to the Court of Protection; or
•The owner of a main residence purchases an additional interest in the property or extends the lease.
The above changes should prevent abuse of the relief which can occur when someone changing their main residence retains an interest in their former main residence.
The Government has also confirmed that it will reduce the SDLT filing and payment window from 30 days to 14 days for land transactions with an effective date on or after March 1, 2019. Furthermore, the Government is planning to make improvements to the SDLT return so that it is easier to comply with the new time limits.
• Andrew Nicholson is managing partner and head of property at Barker Gotelee Solicitors.