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The Welsh Land Transaction Tax (LTT)

Land Transaction Tax

All You Need to Know for Residential Transactions.

Land Transaction Tax (LTT) has now replaced UK Stamp Duty Land Tax (SDLT) in Wales.
These changes took effect on April 1st, 2018. LTT is broadly consistent with SDLT but the Welsh Government has implemented the changes in order to:

  • Simplify the tax and make it fairer
  • Improve its efficiency and effectiveness
  • Focus on Welsh needs and priorities

The new tax is considered to be “progressive”, which means that buyers of lower value properties in Wales will pay less LTT compared to SDLT. We have outlined the changes in this table:

LTT RATES

Buyers of higher priced properties are set to pay substantially more in some cases. The “break-even” point where LTT becomes more expensive than SDLT is £400,000, but the Welsh government estimates that purchases above this threshold account for only 6% each year in Wales. Purchases below £250,000 will save LTT compared to SDLT, with the same amount being charged between £250,000 and £400,000.

LTT for First Time Buyers

During the 2017 budget announcement on 22nd November 2017, UK Chancellor Philip Hammond declared that Stamp Duty Land Tax would be abolished immediately for first-time buyers purchasing properties of up to £300,000. This won’t be applicable in Wales from 1st April 2018, but the new initial price threshold for LTT in Wales will be £55,000 higher than the starting threshold for SDLT. This will be made available to everyone buying in Wales, not just first time buyers. LTT still benefits first-time buyers though, as the average first-time buyer price in Wales is forecast to be £139,000 in 2018-2019.

Mark Drakeford, Cabinet Secretary for Finance in the Welsh Government recently commented:

“If Wales had adopted a similar approach to that taken by the UK government, first-time buyers in Wales would benefit from that tax reduction but this would do nothing to help equally hard-pressed families. My focus has been to help everyone looking to buy a home in this part of the market by increasing the progressivity of the tax overall.”

This website is a useful tool which allows you to calculate LTT and SDLT.

If you want to find out more about the implications of the Land Transaction Tax, please contact James Pearn. James has over twenty years’ experience as a solicitor, he possesses a wealth of knowledge and expertise in both residential and commercial property.

Call – 029 2022 4433 or Email – pearnj@loosemores.co.uk

For a free, no-obligation quote on your conveyancing please click here.

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