Budget Update

Following the autumn budget on 22nd November 2017, the Chancellor of the Exchequer, Philip Hammond has announced permanent relief from stamp duty land tax for first time buyers, effective on all purchases from Thursday 23rd November 2017. Stamp duty land tax is a tax paid by buyers when they complete their purchase of a property. As the price of the property increases, so does the rate of stamp duty. The tax is paid to the Treasury and it generates substantial income for the Government. The Chancellor’s announcement means all first time buyers of homes costing up to £300,000 will not pay stamp duty. This more than doubles the current threshold of £125,000 and it is predicted that this will exempt 80% of all first time buyers from the tax. The Treasury predicts it will amount to an average tax cut of £1,600 for a million first time buyers over the next 3 years. The Government is attempting to offer short term help to people who have been struggling for years to buy their own home and to revive the home-owning dream. The Chancellor has said he wants to take action today to help the young people who are saving to own a home, addressing the challenge for first time buyers of finding the cash up front for their deposit and stamp duty. However, this exemption is only available to first time buyers who meet certain criteria:- 1) The buyers must be individuals and not previously purchased or acquired a major share in a property. If you have inherited or received a share in a property by way of gift, you may not be considered a first time buyer. 2) The buyers must intend to live in the property as their only or main residence. 3) The purchase price cannot be more than £500,000. If these criteria are not satisfied the normal stamp duty thresholds apply and tax will be payable from £125,000. Additionally, home-buyers in Wales need to be aware that this concession on stamp duty will run out in Wales next April 2018 when tax raising powers are devolved from the Government to Cardiff Bay. As from April 2018, stamp duty will be replaced by the new Welsh Land Transaction Tax and it is highly likely that home-buyers in Wales will be paying a different rate of tax to those in other parts of the UK. Under the rates and bands announced by the Finance Secretary for Wales on 3rd October 2017 there are currently no concessions for first time buyers. We will have to wait and see whether the Welsh Government will follow the Government’s lead on stamp duty and abolish tax up to £300,000 for first time buyers in Wales.