From April 1 the Welsh Assembly Government introduced its own Land Transaction Tax (LTT) replacing Stamp Duty Land Tax (SDLT). This means that England, Scotland and Wales each have their own separate regime for taxing the acquisition of land. LTT is the first tax introduced by a Welsh Government in almost 800 years.
What is Land Transaction Tax (LTT)?
Like SDLT, LTT will be payable when you buy or lease a building or land over a certain price. It may affect house buyers and sellers and businesses including builders, property developers and agents involved in the transactions process (such as conveyancers and solicitors).
Changes have been made to:
· Simplify the tax and make it fairer
· Improve its efficiency and effectiveness
· Focus on Welsh needs and priorities
The new rates and bands
There are new rates and bands for both residential and commercial property transactions. The new LTT thresholds will be available to everyone, not just first-time buyers. Companies purchasing residential properties will need to pay the higher rate of LTT, which is 3% on top of the main residential rates.
For the purchase of residential properties, the tax bands are:
| Price Threshold | Rate |
| £0-£180,000 | 0% |
| £180,001-£250,000 | 3.5% |
| £250,001-£400,000 | 5% |
| £400,001-£750,000 | 7.5% |
| £750,001-£1.5m | 10% |
| £1.5m plus | 12% |
For the purchase of non-residential properties:
| Price Threshold | Rate |
| £0-£150,000 | 0% |
| £150,001-£250,000 | 1% |
| £250,001-£1million | 5% |
| £1 million plus | 6% |
What if you exchange before 31st March, but complete on or after 1st April 2018?
All transactions that complete on or after 1st April 2018 are subject to Land Transaction Tax.
The only exception to this rule is where contracts were exchanged on or before 17th December 2014 (when the Wales Act 2014 received Royal Assent to remove the Stamp Duty Land Tax charges), as long as there’s been no amendments to the purchase details.
How will the collection of LTT take place?
The Welsh Revenue Authority (WRA) which is the equivalent to HMRC will deal with the administration and collection of LTT. LTT will have its own separate filing system operated by the WRA rather than at HMRC. The new system will contain online forms and payment facilities for the filing of LTT returns and the payment of LTT. Electronic filing may also be encouraged by the Welsh Government.
Contact us
If you are looking to buy a residential property in Wales or would simply like us to advise you regarding the LTT changes, contact our specialist conveyancing team for professional advice on 01792 468684 or email enquiries@pgmsolicitors.co.uk.
For specific tax advice, we would recommend contacting a tax accountant.
