2010 Stamp Duty Changes

Following on from the recent announcement, take a look at our guide below regarding Stamp Duty Relief for First Time Buyers.

When buying property, there are certain tax issues which buyers need to take into consideration. This tax is termed "Stamp Duty". It is charged in full on the completion of a property purchase (previously when paying more than £125,000). The current chancellor in government has made the following changes to the stamp duty levy, effective from 25th March 2010 to 25th March 2012. This will affect first time buyers in the form of tax relief on property bought up to the sum of £250,000. Below is an indication of the changes.

Residential property purchase price    Rate of Stamp Duty Land Tax
 
£0 - up to £125,000                           0%
 
£125,001 - £250,000                         1%
 
Nb. FTB's exemption for 2 years

as of midnight 24-3-2010 on

purchases upto £250,000 so long

as no other property owned before      exempt - 0%

ANYWHERE in the world, by

the FTB or their partner.
Proof required, fraud could mean

fines of £5,000 and maybe a stay

at Her Majesties pleasure.
 
£250,001 - £500,000                         3%
 
£500,001 - £999,999                         4%
 
£1 million +                                      5%


Questions and answers regarding Stamp Duty Relief

How do you define First Time Buyers?
A First Time Buyer is a person who has not ever acquired (e.g. purchased, inherited etc), a freehold or leasehold residential property in the UK, or the equivalent anywhere else in the world.

How will HM Revenue & Customs know whether an individual is really a First Time Buyer?
The onus is on the Individual to provide accurate information, and they will have to sign a declaration to this effect. (It is the responsibility of the purchaser, not the Estate Agent, or Conveyancing Provider).

HM Revenue & Customs can investigate for up to 6 years after a First Time Buyer has bought a property. If necessary, they can take action against the individual for potentially committing tax fraud.

When is the Stamp Duty Relief Available?
The relief applies for all transactions where the eligible First Time Buyer completes between 25th March 2010 and 25th March 2012.

An individual previously bought a house with their Spouse/Partner, the relationship has now broken up, so can the individual be treated as a First Time Buyer?
No – Where an individual has previously owned a residential property as a joint tenant, or a tenant in common, the individual is not a First Time Buyer.

Is the Stamp Duty Relief available if the individual has inherited property?
No – in this case the Individual will have previously owned a property – so they can not be classed as a First Time Buyer.

Can I claim the Stamp Duty Relief if I’m buying on behalf of my parents?
No – Stamp Duty Relief is only available if the First Time Buyer is buying for themselves, a property that they intend to use as their only or main residence.

Is there a price limit on claiming the relief?
Yes – the sum for the whole of the purchase must not exceed £250,000 (being the purchase price and any additional sums payable under the contract for fixtures and fittings etc).

Can an individual claim a Stamp Duty relief retrospectively?
No – Transactions that complete prior to 25th March 2010 do not qualify