New stamp duty limit and staircasing on shared ownership

Benzanna

Hi,
I'm a first time buyer and I'm very excited to be finally getting a shared ownership home (better than throwing rent down a black hole)

I know I won't pay any stamp duty on my initial 35% purchase, but when I decide to staircase, I'm trying to find out if stamp duty will now apply as I'm no longer a first time buyer - or is that irrelevant as it's the same house?

House is £385k and I'm buying 35% which is £134k, so say I staircase to 45% (£173k)

If anyone knows the answer I would really appreciate some help - I can't find the answer online...
Thanks!

SDLT_Geek

You could elect to utilize your first time buyer status now by electing to pay SDLT on the market value of the property and so get the first £300K tax free. But that leaves you paying SDLT at 5% on the excess, that is £4,250. It would mean no more SDLT payments on staircasing.


The alternative is to pay SDLT "in stages" as you staircase. In practice that means nothing on the first payment (FTB relief), nothing on staircasing to 45%, in fact nothing until you staircase to over £80%. That is then a complicated calculation.

For example if the transaction that takes you over 80% is for £100,000 and your total payments then made are £400,000, you would start by working out the SDLT on £400,000. If today's rates still apply when you got to over 80% that gives a notional figure of SDLT of £10,000. But the SDLT due is a fraction of that. The fraction is 100,000 / 400,000. So the actual tax then due would be 1/4 of £10,000, so £2,500.

Benzanna

SDLT_Geek wrote: »

You could elect to utilize your first time buyer status now by electing to pay SDLT on the market value of the property and so get the first £300K tax free. But that leaves you paying SDLT at 5% on the excess, that is £4,250. It would mean no more SDLT payments on staircasing.


The alternative is to pay SDLT "in stages" as you staircase. In practice that means nothing on the first payment (FTB relief), nothing on staircasing to 45%, in fact nothing until you staircase to over £80%. That is then a complicated calculation.

For example if the transaction that takes you over 80% is for £100,000 and your total payments then made are £400,000, you would start by working out the SDLT on £400,000. If today's rates still apply when you got to over 80% that gives a notional figure of SDLT of £10,000. But the SDLT due is a fraction of that. The fraction is 100,000 / 400,000. So the actual tax then due would be 1/4 of £10,000, so £2,500.

Hi,
Thanks for your help, but after the recent budget release I thought the limit had gone from £300k to £500k?

00ec25

Benzanna wrote: »

Hi,
Thanks for your help, but after the recent budget release I thought the limit had gone from £300k to £500k?

no, people did not read the details

the thresholds remain:
- up to 300K tax free as FTB
- between 300 - 500k as FTB it is still payable at 5%

the only change made in the budget was to give the above relief to people who choose to buy their property in shares and did not make the market value election. So it applies to the first purchase only

subsequent steps are expressly outside the scope of the FTB relief and therefore fall into the normal stair-casing rules

read page 11 re FTB relief (and page 3 for the budget reference):

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/751718/Stamp_Duty_Land_Tax_relief_for_first_time_buyers_-_guidance_note.pdf

re the normal rules, as Geek says, nothing is payable until you get to 80%, read example 2 here:

https://www.gov.uk/guidance/sdlt-shared-ownership-property