First-time buyer relief
These worked examples reflect the LBTT residential rates and bands that apply to transactions with an effective date prior to 15 July 2020 and are for illustrative purposes only.
For transactions with an effective date of 15 July 2020 to 31 March 2021 (inclusive), the amount of tax saved by first-time buyer relief will be £nil due to the temporary increase in the nil rate band.
See the Nil rate band section of our website for further guidance on the changes to the LBTT tax rates and bands that came into effect on 15 July 2020
- First-time buyers purchasing a dwelling for £175,000
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Ashley and Reece purchase a dwelling for £175,000 on 1 July 2018 which they will use as their main residence. Neither Ashley or Reece have ever owned a dwelling and they both meet the definition of a first-time buyer.
A claim for first-time buyer relief is made on the first LBTT return submitted for the transaction. The amount of LBTT due on the transaction is calculated as follows:
0% on the first £145,000 £0 2% on the remaining £30,000 £600 Less First-Time Buyer relief claimed £600 Total LBTT due on this transaction £0 Ashley and Reece are not due to pay any LBTT as they are entitled to the full relief of £600 (although a return must still be filed).
- First-time buyer purchasing a dwelling for less than £175,000
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Gurnam purchases a dwelling for £150,000 on 1 August 2018 which she will use as her main residence. Gurnam has never owned a dwelling and meets the definition of a first-time buyer.
A claim for first-time buyer relief is made on the first LBTT return submitted for the transaction. The amount of LBTT due on the transaction is calculated as follows:
0% on the first £145,000 £0 2% on the remaining £5,000 £100 Less First-Time Buyer relief claimed £100 Total LBTT due on this transaction £0 Gurnam is not due to pay any LBTT as she is entitled to full relief of £100 (although a return must still be filed).
- First-time buyers purchasing a dwelling for over £175,000
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Erin and Justine purchase a dwelling for £250,000 on 15 July 2018 which they will use as their main residence. Neither Erin or Justine have ever owned a dwelling and they both meet the definition of first-time buyer.
A claim for first-time buyer relief is made on the first LBTT return submitted for the transaction. The amount of LBTT due on the transaction is calculated as follows:
0% on the first £145,000 £0 2% on the remaining £105,000 £2,100 Less First-Time Buyer relief claimed £600 Total LBTT due on this transaction £1,500 Erin and Justine are entitled to the full amount of first-time buyer relief, however the maximum amount of relief that can be claimed is £600, therefore the total LBTT due on the transaction is £1,500.
- Individual is not a first-time buyer
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Colin was gifted a dwelling by his grandmother which he then sold. He now purchases a dwelling for £300,000 on 1 November 2018 which he will use as his main residence.
As Colin previously owned a dwelling, he is not a first-time buyer therefore he cannot make a claim for the relief on his LBTT return.
- Only one buyer is a first-time buyer
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Paul and Simon live together in rented accommodation. Paul has never owned any property, but Simon used to own a dwelling in Belgium which he has since sold.
Paul and Simon purchase a dwelling for £195,000 on 1 September 2018 which they will use as their main residence.
Whilst Paul meets the definition of first-time buyer, Simon does not. Therefore, a claim for the relief cannot be made on the LBTT return.
- Additional Dwelling Supplement (ADS) applies to transaction
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Joyce lives with her husband Rupert in a dwelling which is owned by Rupert. Joyce then purchases a dwelling for £200,000 which they will both use as their new main residence. Rupert will retain the current dwelling and use it as a holiday-let.
Joyce has never owned a dwelling and meets the definition of a first-time buyer. However, for the purposes of ADS, she is deemed to own the dwelling owned by Rupert, and as Joyce is not replacing her main residence – by selling or disposing of the ownership of her previous main residence – the ADS will apply to the transaction.
As first-time buyer relief is not available where ADS applies to a transaction, Joyce cannot make a claim for the relief on her LBTT return.
- Beneficiary of a bare trust is not a first-time buyer
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Craig and Sam are the trustees of a bare trust for the benefit of Connor. Craig and Sam, as trustees, own a dwelling which they use as a buy-to-let investment to generate income for the trust.
Connor then purchases a dwelling for £175,000 on 1 December 2018 which he will use as his main residence.
Although title to the buy-to-let dwelling is registered in the Land Register in the name of the trustees, for the purposes of the first-time buyer relief, Connor, as beneficiary, is deemed to be the owner of the dwelling. This means that Connor cannot make a claim for the relief on his LBTT return.
- Beneficiary of a discretionary settlement is a first-time buyer
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Miguel, the trustee of a discretionary settlement for the benefit of Maria, purchases a dwelling as a trustee. Maria does not have a right to occupy the dwelling under the trust, nor can she require Miguel to pay her any income from the dwelling.
Maria purchases a dwelling for £160,000 on 1 February 2019 which she will use as her main residence.
Maria has never owned a dwelling, and as her possible future benefit from the trust does not amount to a relevant interest in the trust dwelling, she meets the definition of a first-time buyer.
A claim for first-time buyer relief is made on the first LBTT return submitted for the transaction. The amount of LBTT due on the transaction is calculated as follows:
0% on the first £145,000 £0 2% on the remaining £15,000 £300 Less First-Time Buyer relief claimed £300 Total LBTT due on this transaction £0 Maria is not due to pay any LBTT as she is entitled to full relief of £300 (although a return must still be filed).
- Linked transactions
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Jason purchases a flat above a shop for £185,000 on 1 June 2018 which he will use as his main residence. Jason has never owned a dwelling and meets the definition of a first-time buyer.
Jason also purchases the shop below the flat from the same seller. As these transactions are linked, Jason cannot make a claim for the relief on his LBTT return.
However, if the linked purchase was of the garden or grounds of the flat, or land that subsists or is to subsist for the benefit of the flat, Jason could have made a claim for the relief on his LBTT return.
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