Okells Francis Law advert

Welsh Land Transaction Tax

From 1st April Land Transaction Tax (LTT) replaced Stamp Duty Land Tax (SDLT) for property purchases in Wales. Property lawyers in England and Wales have been gearing up for the change.

LTT will only apply when buying or leasing property in Wales that completes on or after 1st April 2018. Different rates will apply, depending on whether the property is residential or commercial. Whilst it will be similar to SDLT, there are some notable differences:

  • The starting threshold for LTT for residential property will be £180,000.00, in contrast to £125,000.00 for SDLT, however, LTT will be higher than SDLT for properties valued between £400,000.00 and £925,000.00.
  • There will be no LTT payable on the rental element of residential leases.
  • There will be no relief from LTT for first time buyers.

As with SDLT, higher rates of duty will apply on purchases of additional residential property but relief will be available from the higher rate, currently 3%, where a main residence is being replaced. Where a second or additional property is acquired to replace a main residence, but completes before the sale of your main residence, providing the main residence is sold within three years, it will be possible to re-claim the extra 3% charge from the Welsh Revenue Authority. The commercial rates of LTT are, as with residential properties, reduced for lower value properties but become more expensive for non-residential properties in excess of £1m.

Where a property straddles the border between England and Wales, the amount of tax payable will be apportioned on a just and reasonable basis between LTT and SDLT. It will be necessary, in this situation, to file two returns, one with the Welsh Revenue Authority for LTT and one with HMRC for the SDLT. The advice in these circumstances is to obtain a valuation in order to be able to deal with the just and reasonable apportionment.