A New Land Transaction Tax For Wales (Instead Of Stamp Duty Land Tax)
A new Land Transaction Tax (LTT) will replace Stamp Duty Land Tax (SDLT) in Wales from 1 April 2018. The changes will make the rate of tax on Welsh properties cheaper at the lower end of the market, but more expensive at the higher end.
The changes are set out in the Land Transaction Tax and anti-Avoidance Devolved Taxes (Wales) Act 2017 (the Act). The Welsh LLT will be largely based on SDLT but there are some changes.
How Will The LLT Scheme Work – And What Are The Changes?
- LLT will be applied to purchases from April 2018 (after which SDLT will not apply in Wales).
- LTT will be collected by the Welsh Revenue Authority (WRA).
- LTT will be payable when buying or leasing buildings/land valued over £180,000.
- There will be no first-time buyer relief. First-time buyers in Wales should however note that the £180,000 threshold value for LTT is higher than the SDLT threshold of £125,000.
- The Act preserves the higher rates of SDLT introduced in 2016.
- The Act deals with how and when LTT is payable and how the tax is calculated and collected. It also deals with penalties for non-compliance.
- Anti-abuse rules are built into the Act and set out when relief is available on land transactions where the primary purpose of the land transaction is a tax advantage.
- There are also some changes relating to leasehold land meaning, for example, that charges will be payable on purchases of land with 21 years plus left of the lease (unlike in England).
- Changes are also made to the England "replacement main home" exemption meaning that more second homes are likely to be caught by the LTT.
We (at Pearson) will be registering with the WRA so that we can file documents online and enable our clients to meet their tax liabilities effectively and promptly.
A reminder of the current SDLT position
For those living in England and Northern Ireland, here's a reminder about SDLT:
- The SDLT threshold for residential properties is £125,000; for non-residential properties, the threshold is £150,000;
- First-time buyers get relief from SDLT where the purchase price is £500,000 or less and they are buying a home for themself or with other first-time buyers;
- SDLT does not apply in Scotland. Purchasers of land in Scotland pay Land and Buildings Transaction Tax when they buy property.
- Changes made to SDLT back in April 2016 included:
- - the introduction of an extra 3% of stamp duty payable on investment properties and second homes over £40,000; and
- - new stamp duty rates were also introduced for commercial property (namely, a zero rate for properties valued at up to £150,000).
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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.