From April 2018, Land Transaction Tax (LTT) will replace UK Stamp Duty Land Tax (SDLT) in Wales.
In an official press release, the Welsh Government announced that the starting threshold for Land Transaction Tax (LTT) for all residential purchases in Wales will increase from £150,000 to £180,000 when the tax is devolved in April 2018.
The new threshold, which has been set £55,000 higher than the base rate for Stamp Duty Land Tax in England, aims to reduce the tax burden for around 24,000 homebuyers in Wales – including first-time buyers.
Professor Drakeford’s decision to change the starting threshold for LTT follows the UK Government’s introduction of a Stamp Duty Land Tax (SDLT) relief for first-time buyers in the Autumn Budget.
The Finance Secretary said he has given careful consideration to the right approach for both the Welsh property market and for Welsh homebuyers. His focus is to help everyone looking to buy a home in this part of the market by increasing the progressivity of the tax overall.
The new tax rates mean:
• no one will pay more tax under the announced changes compared to the LTT rates which were announced at the time of the draft Budget in October
• the average homebuyer in Wales will pay more than £500 less tax than under SDLT
• around 90 per cent of homebuyers in Wales will either pay the same or less tax than under SDLT
• around 80 per cent of first-time buyers in Wales will pay no tax – the same proportion which will benefit from the Chancellor’s first-time buyer SDLT relief in England
Professor Drakeford commented: “Under the changes to the main rates of land transaction tax, which I am announcing today, around 65 per cent of these house sales will not be liable for tax. The changes will benefit more buyers than the Chancellor’s targeted relief for first-time buyers – more than half of buyers will benefit from a reduction in tax relative to stamp duty land tax.
“This is consistent with my aim to make tax fairer and contribute to a more equal Wales. These improved rates will help meet Wales’ needs and priorities and will make a real difference to people’s lives.”
Land Transaction Tax Summary
Transactions on or after 1 April 2018
From 1 April 2018 you’ll pay Land Transaction Tax (LTT) on any land transactions in Wales. LTT is operated by the Welsh Revenue Authority.
You won’t have to pay Stamp Duty Land Tax (SDLT) or need to send HM Revenue and Customs (HMRC) a return for these transactions.
You’ll still have to pay SDLT and notify HMRC if your transaction matches one of the cases below.
Retrospective notification cases
Tell HMRC about your transaction afterwards. For example, those cases where the transaction took place before 1 April 2018 but didn’t become notifiable until after 1 April 2018.
Land transactions where a contract was entered into before 17 December 2014 but completion takes place on or after 1 April 2018.
Transactions for land that falls on both sides of the English-Welsh border. You’ll only pay SDLT on the English part of the transaction.
Multiple interest cases
A single transaction relating to multiple properties that are in England, Northern Ireland (or both) and Wales. Only the properties in England and Northern Ireland are subject to SDLT.
Any properties in Scotland which are part of the transaction are subject to Land and Buildings Transaction Tax.