Jun 21

Land Transaction Tax replaces Stamp Duty Land Tax in Wales – April 2018

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Land Transaction Tax replaces Stamp Duty Land Tax in Wales – April 2018

Since April 2018 Stamp Duty Land Tax has been replaced by Land Transaction Tax (LTT) for properties purchased in Wales.
The new LTT will be paid when the purchase price of a property bought in Wales exceeds the 0% threshold. While LTT is replacing SDLT, the two concepts are fairly similar, however the main differences will be summarised below.

The threshold for LTT at 0% applies to the portion of the price up to and including £180,000. Therefore the price band for the 0% threshold under the LTT scheme is considerably higher than 0% SDLT threshold which is currently £125,000. This applies to both leasehold and freehold residential properties. However different rules apply to non-residential properties.

The new land tax in Wales has been described as somewhat ‘progressive’ as the changes to the tax bands and percentage rates result in buyers paying more tax on properties which are worth between £400,000 and £925,000 in Wales than those of equal price located in England. Interestingly, there is no relief from LTT for first-time buyers in Wales as opposed to England where first time buyers do not pay any stamp duty for properties worth up to £300,000.

The Welsh government states that the changes are made to ‘simplify the tax’ and make the tax system ‘fairer, improve its efficiency and effectiveness’ to ‘enable a focus on Welsh needs and priorities.’

For more information, thresholds and tax bands for LTT can be found at: https://gov.wales/docs/caecd/publications/180213-rates-bands-en-b.pdf.

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