The new budget was hard hitting indeed. We were all expecting there to be harsh cuts but it is only now, over a week on, that it is all starting to sink in as we work out exactly how it is going to affect us. No one will go unaffected since the cuts will impact on just about everyone. 'This is Money' reported on 24 June 2010 that it is likely the Stamp Duty break for first time buyers will be axed. The break was first introduced by the Labour government in the last Budget and it was expected that it would be made permanent by the Tories if they came into power. However, it now seems they are going back on what they pledged. The Budget said:
'As announced in the Coalition Agreement, the Government will review the Stamp Duty Land tax relief for first time buyers taking into account its impact on affordability and value for money. '
They will undoubtedly argue that although the tax exemption was in the party manifesto, due to the current economic climate, it will not be possible to sustain.
The first time buyer concession relates to properties up to £250, 000 and it means that if you are a genuine first time buyer (i.e. you have never owned a property) then you will not have to pay SDLT on your sale up to £250, 000. Anything over that is taxed at 3% and above, on the entire purchase price. No SDLT is payable on residential properties below £125, 000. Click here to view the HM Revenue and Customs SDLT threshold table.
The first time buyer SDLT exemption is not used as much in London since the cost of properties is generally higher than places outside London so if the SDLT exemption is removed it will affect those outside London more. If this is to happen, I would expect to see a dip in property purchases while home buyers re-assess their plans to buy.