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Budget 2018: How to Claim a Stamp Duty Refund for First-Time Buyers

Budget 2018 analysis from Andrew & Co's Head of Residential Property Jo Sworder. 

The dust has finally settled after last week’s Budget, but have you thought about how the Chancellor’s speech might impact you?

One of the groups which should sit up and take note if they want to save some money is first-time buyers purchasing shared ownership properties.

Last year, in his second budget, Phillip Hammond made a landmark announcement – first-time buyers purchasing a house worth £500,000 or less were exempt from paying stamp duty on the first £300,000 of the purchase price.

Last week the Chancellor announced an extension to the rules for first-time buyers buying shared ownership properties who do no elect to pay stamp duty on the market value of the property, but rather pay it in stages. 

When you buy a share in a property through an approved shared ownership scheme, there are two ways to pay stamp duty: make a one-off payment based on the total market value of the property or elect to pay it in stages.

If you decide to make a one-off payment up front, you are making a ‘market value election’ for stamp duty.

If you choose to pay stamp duty in stages, you pay anything that’s due on the first purchase amount. You then don’t make any further payments until you own more than an 80 per cent share of the property.

You can choose which option is best for you, depending on your circumstances.

What’s changed since the Budget is that first-time buyer relief can now be claimed for either method, not just on payments paid on the market value of the property.

What does this mean if you purchased a shared ownership house over the last year and paid your tax in stages?

The extension in the rules will apply retrospectively from 22nd November 2017 onwards, which means those who did pay stamp duty under the previous rules between 22nd November 2017 and 28th October 2018 will be able to claim a refund of the tax paid.

The amount you can claim is the amount of stamp duty paid that would have been charged had the new rules been applied. This may mean a partial or full refund.

To claim a refund, you must write to HMRC and include:

  • The details of your transaction, including the reason why the amendment to your original return is being made (eg, you are claiming First Time Buyer Relief).
  • The unique reference number for your return. Your solicitor who acted for you in your purchase will be able to provide this to you.
  • The revised figures and confirmation of the amount of stamp duty to be refunded.
  • Confirmation of who to pay. This should be the purchaser, unless you specifically authorise the payment to be made to someone else.

However, the relief does not mean that no stamp duty will be paid up to £500,000. First-time buyers purchasing their first home for £300,000 or less will pay no stamp duty.

Where the purchase price is over £300,000 but does not exceed £500,000, you will pay five per cent on the amount above £300,000. So, if you buy your house for £400,000, you will pay five per cent on £100,000 which would total £5,000.

In a nutshell, the changes announced last week simply bring those first-time buyers of a shared ownership property who elect to pay stamp duty in stages in line with other first-time buyers.

If you’ve been affected by the rule change, make sure you contact HMRC to refund the money you’re entitled to.

To contact Andrew & Co Solicitors for more expert advice, please call their offices in Lincoln or Newark on 01522 512123 and 01636 673743 respectively.