133: Fancy a place in Wales? Welsh land transaction tax rates will apply
Jennifer Chappell Real Estate Counsel
If you are buying property in Wales, whether commercial or residential property, take note that the Welsh Land Transaction Tax (LTT) comes into effect on 1 April 2018.
The LTT replaces UK stamp duty land tax (SDLT) and the Welsh government have now published the rates which will apply from April 2018. See rates table below.
This change will affect home buyers, investors, developers, builders, agents – on the assumption that the property is over a certain price threshold and is located within the Welsh borders. As part of devolution, the public services in Wales will benefit directly from the LTT which can be geared more towards taxes which are better suited to the needs of Wales.
The threshold for paying LTT on residential transfers is higher than that for SDLT, so Welsh first-time buyers should welcome this news. The Welsh government comments that buyers of residential properties for up to £400,000 should pay the same or less under LTT than under SDLT, with nine out of ten home buyers paying the same or less under LTT than under SDLT.
However, for people buying an additional residential property, the higher rate of tax will still be levied in Wales – an additional 3% on top of the main residential rate in each band.
For purchases of non-residential property, the Welsh government comments that Wales will have the lowest starting rate of tax in the UK and that all businesses buying premises up to the value of £1.1 million will pay either no LTT or up to £1,000 less under LTT than under SDLT.
It seems that Wales has not had control of its tax system since the thirteenth century when Edward I invaded Wales. Now with the new LTT coming in, Wales has also announced ideas for further devolved taxes and is fully committed to taking back control of its taxes.
Residential LTT Rates
| Price Threshold | Main Residential Rates |
|---|---|
| £0-£150,000 | 0% |
| £150,000 – £250,000 | 2.5% |
| £250,000 – £400,000 | 5% |
| £400,000 – £750,000 | 7.5% |
| £750,000 – £1.5 million | 10% |
| £1.5 million – plus | 12% |
Non-Residential LTT Rates
| Price Threshold | Rates |
|---|---|
| £0 – £150,000 | 0% |
| £150,000 – £250,000 | 1% |
| £250,000 – £1 million | 5% |
| £1 million plus | 6% |
Non-Residential LTT Lease Rates
| Net present value threshold | Rates |
|---|---|
| £0 – £150,000 | 0% |
| £150,000 – £2 million | 1% |
| £2 million plus | 2% |
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