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A guide to Welsh Land Transaction Tax

As of April 2018, Wales will no longer have Stamp Duty Land Tax. Instead, this will be changing to Land Transaction Tax (LTT).

A guide to Welsh Land Transaction Tax

The LTT will be paid to the Welsh Revenue Authority (WA) instead of the HMRC. Your solicitor will need to be registered with the WRA in order to submit your payment.

Why is it changing?

Much like Scotland, who have also replaced SDLT with their Land and Buildings Transaction Tax, Wales is a devolved state. By making changes to tax paid on properties, they are able to personalise it in line with the prices of properties in Wales. It also means the income from the LTT will go directly to Wales, rather than all Stamp Duty in the UK going to the HMRC and being portioned out to different areas of the UK by the Treasury.

What is LTT?

Land Transaction Tax is incredibly similar to Stamp Duty Land Tax, in that it is a payment from the buyer to the government when purchasing a property. It will come into action on 1st April 2018.

The main difference to Stamp Duty is the tax bands, and the fact that the starting price for paying LTT is on properties of £180,000 and up. This is more in line with property prices in Wales, rather than sticking to the SDLT tax-free limit of £125,000.
 
Tax bands:
 
Threshold Land Transaction Tax Rate
Up to £180,000 0%
£180,001 - £250,000 3.5%
£250,001 - £400,000 5%
£400,001 - £750,000 7.5%
£750,001 - £1.5 million 10%
Over £1.5 million 12%
 
 
 
 
 
 
 
 



In the same way that Stamp Duty works in England and Northern Ireland, and Land and Buildings Transaction Tax (LBTT) works in Scotland, LTT percentages will be charged on the portion of the property that falls in that bracket.

For example if your property costs £250,500, you would pay:

0% on the first £180,000 = £0
3.5% on £70,000 (the £180,001 - £250,000 bracket) = £2450
5% on £500 (the £250,001 - £400,000 bracket) = £100
Meaning your total LTT payment would be: £2550
 

What are the rates for second properties/buy to let?

 
Threshold Land Transaction Tax Rate
Up to £180,000 3%
£180,001 - £250,000 6.5%
£250,001 - £400,000 8%
£400,001 - £750,000 10.5%
£750,001 - £1.5 million 13%
Over £1.5 million 15%
 
 
 
 
 
 
 
 



There is an important addendum to this second home higher rate – if you make your second home your main residence within 36 months of buying it (meaning you sell the first property) you will be able to claim back the higher rates you paid.

What does this mean for first time buyers?

Unfortunately for first time buyers, the Stamp Duty exemption won’t count in Wales. The LTT system has decided against an exemption for first time buyers, as the tax free threshold is higher. Whilst house prices in Wales are currently increasing, the average house in January 2018 cost £179,855, which would remain beneath the LTT threshold. So in many cases, first time buyers will not pay tax anyway.

When do I pay LTT?

In line with Stamp Duty Land Tax payments, you are required to pay your LTT to the WRA within 30 days of completion. If you have a conveyancing solicitor, they will file the return as part of their service and let you know how much has to be paid.

Who is exempt from paying LTT?

  • People buying properties under £180,000
  • Properties transferred during a divorce or dissolution of a civil partnership
  • When no money has changed hands
  • People who inherited the property in a will and have not paid anything

 Calculating your Welsh Lands Transaction Tax (LTT)

When you get a conveyancing quote for a property move in Wales, our website has ensured that the LTT rates are appropriate and updated.
 

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