Stamp Duty boost for first time buyers as £1m home purchases are clobbered

From midnight tonight first time buyers will no longer be required to pay the 1 per cent stamp duty land tax charge on residential property purchases of less than £250,000. This will be an immediate tax saving of £1,250 on a property bought for £249,999 as the previous threshold was £125,000. This measure is partly funded by a new 5 per cent rate for residential properties above £1,000,000. However, Treasury figures show that this will only recoup £70 million compared to the £290 million annual cost of the relief for first time buyers. Stuart Lisle, Tax Partner at BDO LLP in Southampton commented: “The Government will no doubt be hailing this as a progressive measure to help young people mount the first rung of the property ladder and provide stimulus to the residential property market. “However, as residential properties above the £250,000 threshold will still be subject to stamp duty land tax at 3 per cent there is the potential for a severe bottleneck as buyers become unwilling to pay tax of £7,500 for properties valued at £250,001 and above. It is very regrettable that the Chancellor has failed to reform the “slab” system of stamp duty rates which gives rise to this anomaly. One also wonders how HMRC intend to monitor who is a first time buyer eligible for this measure and I fear complex rules and significant intrusion. “In the South East the impact of the 5 per cent rate may have a real impact on the upper end of the market as buyers may resist the additional £10,000 in Stamp Duty Land Tax.” -Ends-

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