Friday, 13 July 2012 1:37 PM
For two years, first-time buyers looking to take out a large residential mortgage could avoid paying stamp duty land tax on the property provided the purchase price was below the £250,000 threshold.
Then, in March this year, the government confirmed that the holiday would not be extended and would instead be replaced by a new initiative known as NewBuy.
Estate agents and others in the property industry voiced their concerns that the removal of the relief would have a detrimental impact on the number of first-time buyers getting a foot on the property ladder and that this would have repercussions for the rest of the market.
New data from the National Association of Estate Agents seems to confirm many of these fears.
According to the organisation's Market Report for May, just 17 per cent of overall sales made during the month went to those purchasing their first property.
This is compared to 24 per cent in April and amounts to the biggest slump in first-time buyers recorded by the NAEA in the last six months.
The body noted that in October 2011, first-time buyers comprised just 16 per cent of the market.
In terms of the impact this has had on the rest of the market, the NAEA stated that sales remained relatively stable, with supply levels increasing during May.
Mark Hayward, president of the organisation, said the figures clearly show the impact that abolishing the stamp duty holiday for first-time buyers has had.
He noted that the first-time buyer market was already fragile and that the removal of the relief has had a detrimental impact.
That being said, it is not solely down to the removal of the holiday, with Mr Hayward pointing out that tighter mortgage restrictions and reduced consumer purchasing power have both made the environment more difficult.
When revealing the Budget earlier this year, the Chancellor George Osborne stated that the government's NewBuy scheme would have more of a positive impact in the long-term than the stamp duty holiday had and it remains to be seen whether this will actually be the case or not.
What first-time buyers and others looking to move up the property ladder can do if they are worried about how much stamp duty they will have to pay is explore the idea of stamp duty planning.
Also known as stamp duty mitigation, it could save you a significant amount of money and even help you avoid the tax altogether.
At this point, it is important to note that by using a mitigation scheme, you are not evading tax.
Stamp duty mitigation simply involves putting together a plan based around the UK's tax laws to reduce stamp duty liabilities.
It is perfectly legal, as opposed to tax evasion, which is not.
Mitigation companies are staffed by trained accountants and tax experts, who interpret tax laws and look at ways you can reduce your liabilities.
A good firm will aim to save you the whole amount of stamp duty and can boast a 100 per cent success rate of defending their schemes from any challenges launched by HMRC.
As with most things in life, stamp duty mitigation is not guaranteed to reduce your bill, however, unless you ask, you will never know how much you could potentially save.