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Land Transaction Tax replaces Stamp Duty in Wales

Tuesday 27 March 2018

From 1 April 2018, Land Transaction Tax (LTT) will replace Stamp Duty Land Tax (SDLT) in Wales, marking the first new tax in the country for 800 years.

With the current average house price in Wales at £153,034, the new taxes, which kick in on property's above £180,000, will save the average home buyers £560 compared with Stamp Duty Land Tax.

Going forward the Welsh Revenue Authority (WRA) will be responsible for the collection and management of Welsh devolved taxes, with HMRC no longer accepting SDLT returns for land transactions in Wales with an effective date of transaction on or after 1 April 2018. Solicitors and legal conveyancers will need to register to file LTT returns online.

As with the rest of the UK, the tax will be tiered, however the price bands and percentages do differ between LTT and SDLT. The new thresholds see a 3.5 per cent charge on properties between £180,000 and £250,000, five per cent on the portion between £250,001 to £400,000, 7.5 per cent on £400,001 to £750,001, 10 per cent on £750,000 to £1.5 million and then 12 per cent on anything above £1.5 million. 

A higher rate of tax will also apply to purchases of additional residential properties, including second homes, being charged at an extra three per cent. 

Mark Hayward, NAEA Propertymark Chief Executive commented: “We’re pleased that the Welsh Government has listened to our proposals and next week will be introducing new land transaction tax (LTT) bands in Wales; house buyers will really feel the difference of these changes. For buyers at the lower end of the market, the new bandings mean they won’t pay any land transaction on properties worth up to £180,000; this is the value of the average house price in Wales.”

Guidance

The Welsh Revenue Authority website is the best place to go for guidance on the changes, and includes information on cross-border transactions and how the taxpayer is under an obligation to split the consideration given, based on the relative value of the land that falls into each tax jurisdiction.

The WRA have also created a tax calculator to help people work out the amount of LTT they will need to pay for Welsh transactions completed on or after 1 April 2018.

Don’t forget the NAEA Propertymark legal helpline is also here to help, and if you are looking for consumer advice, we have a helpful guide, which sets out everything your customers need to know about land taxes.