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A new era for stamp duties

The stamp duty regime has seen some significant changes in recent times, and there are further measures in the pipeline.

New exemption for first-time buyers

In the 2017 Autumn Budget, Chancellor Philip Hammond announced a new exemption from stamp duty land tax (SDLT) for most first-time buyers. A first-time buyer is an individual or individuals who have never owned an interest in a residential property in the UK or elsewhere, and who will occupy the property as their main residence.

From 22 November 2017, first-time buyers in England, Wales (until April 2018) and Northern Ireland paying £300,000 or less for a residential property no longer pay SDLT. Those paying between £300,000 and £500,000 pay SDLT at 5% on the amount of the purchase price in excess of £300,000. Those purchasing property for more than £500,000 will not be entitled to any relief and will pay SDLT at the normal rates. The rates applying in England, Wales and Northern Ireland are:

Residential

£

Rate

%

Non-residential

£

Rate

%

 

 

 

Up to 125,000 0 Up to 150,000 0
125,000 – 250,000 2 150,000 – 250,000 2
250,000 – 925,000 5 Over 250,000 5
925,000 – 1,500,000 10  

 

 

Over 1,500,000 12

The rates apply to the portion of the total value which falls within each band. Additional duty of 3% may apply to the purchase of additional residential properties.

The new Land Transaction Tax

From 1 April 2018, Wales will roll out its own stamp duty equivalent, the Land Transaction Tax (LTT), which preserves the essential structure of SDLT but with some key differences, including a higher starting threshold, together with higher rates of duty for some residential properties with a greater value. The existing first-time buyer exemption will also be removed. The proposed new LTT rates are:

Residential

£

Rate

%

Non-residential

£

Rate

%

 

 

 

 

Up to 180,000 0 Up to 150,000 0
180,000 – 250,000 3.5 150,000 – 250,000 1
250,000 – 400,000 5 250,000 – 1,000,000 5
400,000 – 750,000 7.5 Over 1,000,000 6
750,000 – 1,500,000 10
Over 1,500,000 12

The Land and Buildings Transaction Tax

Scotland has its own equivalent of SDLT, the Land and Buildings Transaction Tax (LBTT). The current rates of LBTT are as follows:

Residential

£

Rate

%

Non-residential

£

Rate

%

 

 

 

Up to 145,000 0 Up to 150,000 0
145,000 – 250,000 2 150,000 – 350,000 3
250,000 – 325,000 5 Over 350,000 4.5
325,000 – 750,000 10
Over 750,000 12

In the Scottish Budget in December, Finance Secretary Derek Mackay confirmed that the LBTT rates will remain the same for 2018/19. However, a new relief for first-time homebuyers is planned for purchases up to £175,000. Where a property costs more than this amount, first-time buyers will benefit from relief on the portion of the price below the threshold.

We can help with all aspects of property taxation. Please contact us for further advice.