The Budget 2010 – Stamp Duty Land Tax
Prior to the absolution of Parliament in anticipation of the General Election on May 6th Alistair Darling set out Labour’s Budget on 24th March 2010. This Budget set out significant taxation changes, including alterations to ‘Sin’ Taxes, Fuel Tax, Savings and Inheritance Tax. However one of the more interesting and debated changes was Labour’s adjustment to Stamp Duty Land Tax (SDLT) thresholds.
Homes with a Value of Less than £250,000.00
Legalisation introduced under the Finance Bill 2010 scraps SDLT for first time buyers worth up to £250,000. This threshold is of particular importance as the average UK house price is £219,832. Only London and the South-East of the Country have a greater average house than the recent introduction covers (£370,571 and £255,426 respectively).
This change took place at Midnight on 24th March 2010 and will last for a further two years. Statistics state that this new threshold will mean that 9 out of 10 people buying their first home will not be liable for SDLT.
Homes with a Value Greater than £1million
In order to finance this abolition of SDLT for homes less than £250,000 a new rate of 5% duty will be levied, from 6th April 2011, against homes costing more than £1million. This again penalises the South-East and London as it is here where 8 out of 10 homes are still worth £1million or more.
Post General Election
The Conservative Party have also promised to scrap SDLT for all first-times buyers purchasing properties worth £250,000 or less; the only difference is that the Tories have pledged that this is a permanent alteration not merely a two year holiday. The Liberal Democrats have remained silent on this issue but have stated that they will, if in power, take steps to prevent companies from avoiding SDLT.
The Future
Whilst the future of all taxation plans rests heavily upon the result of May’s election this taxation break should be enjoyed and utilised. Le-Ann Walker, a Partner in our Sandbach Office who specialises in Residential Conveyancing states, “Hopefully the scrapping of SDLT for first time buyers should encourage first time buyers to get onto the property ladder and stimulate the market. However buyers should be aware that the term “first time buyer” only applies to people who have not previously owned (whether by purchase, inheritance, gift or otherwise) an interest in a property anywhere in the world. The exemption will not apply if 2 people are buying a property and one party has already owned a property.
Should you require any assistance or advice in relation to Stamp Duty Land Tax or any Residential Conveyancing Matters please contact Le-Ann Walker on 01270 762521.