New Welsh Land Transaction Tax

Land Transaction Tax Rates

A new Land Transaction Tax (LTT) will come into effect in Wales from 1st April 2018, replacing Stamp Duty Land Tax (SDLT).

The move comes as part of a wider pattern of fiscal devolution which will see Wales bearing responsibility for raising part of its own tax revenue for the first time in nearly 800 years.

The LTT will be administered by the Wales Revenue Authority.  As with SDLT a return must be filed and paid within 30 days of the transaction.

The LTT will affect both residential and commercial property transactions in Wales.  As far as residential purchases are concerned, there will now be no tax payable on transactions up to £180,000 (£125,000 under SDLT) as shown in the tables below:

Residential Land Transaction Tax Rates

Value up to £180,000 0%
£180,001 – £250,000 3.5%
£250,001 – £400,000 5%
£400,001 – £750,000 7.5%
£750,001 – £1,500,000 10%
Value over £1,500,000 12%

Residential Stamp Duty Land Tax Rates

£0 – £125,000 0%
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1,500,000 10%
Value over £1,500,000 12%

As far as commercial property transactions, including farmland, are concerned, new LTT rates are set out below:

Commercial Land Transaction Tax Rates

£0 – £150,000 0%
£150,001 – £250,000 1%
£250,001 – £1,000,000 5%
Value over £1,000,000 6%

Commercial Stamp Duty Land Tax Rates

£0 – £150,000 0%
£150,001 – £250,000 2%
Value over £250,000 5%

The new LTT will mean that anyone in Wales buying land or other commercial property for over £1,100,000 will pay more tax on that transaction, although the new rates will result in less tax payable on transactions between £150,000 and £1,100,000.

Anyone who purchases land which straddles the border between England and Wales will need to submit both SDLT and LTT returns and are instructed to apportion consideration on a “just and reasonable basis.”

If you are looking to purchased land or property, whether it’s residential or commercial, please contact our tax experts would be more than happy to discuss your situation with you.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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