All change for homebuyers in Wales – Land Transaction Tax

Land Transaction Tax – All change for homebuyers in Wales

The weather isn’t the only thing that’s changing in Wales this spring. Did you know that as of April 2018, stamp duty in Wales is being replaced by a new Land Transaction Tax (LTT)?

According to the government, the change has been made in order to make the system simpler, fairer and more efficient, as well as being more focused on Welsh needs and priorities.

Broadly similar to stamp duty in structure, Land Transaction Tax will be payable when buyers in Wales purchase properties or land over a certain value.

So how does the new system work?

If you’re buying a property as your main residence, tax will only be payable if the property costs more than £180,000.

Just like stamp duty, you pay different rates of Land Transaction Tax according to the value of the property. Take a look at the table below to find out how much you’d pay on your property.

£0 – £180,000 0%
£180,001 – £250,000 3.5%
£250,001 – £400,000 5%
£400,001 – £750,000 7.5%
£750,001 – £1.5M 10%
£1.5M+ 12%

First-time buyers

Under Land Transaction Tax, first-time buyers will be charged the same rate as other home movers. See above table for details. This is in contrast to current stamp duty rules, in which first-time buyers pay nothing if their property is worth less than £300,000 and a reduced rate if the value is between £300,000 – £500,000.

Additional properties

Second homes, holiday homes and buy-to-let properties will be charged at 3% more than the main residential rates.

£0 – £180,000 3%
£180,001 – £250,000 6.5%
£250,001 – £400,000 8%
£400,001 – £750,000 10.5%
£750,001 – £1.5M 13%
£1.5M+ 15%

If you pay this higher rate, then go on to sell your main residential property and take up residence in your second home or buy-to-let, this additional 3% can be refunded within 3 years of completion.   The additional homes rules are complex though and can vary considerably based on your specific circumstances, so please always refer to the guidance from the WRA.

The Welsh Revenue Authority (WRA) will collect Land Transaction Tax.

A handy Land Transaction Tax calculator is available on the WRA website.

If you have any concerns about how the new tax will affect your property transaction, speak to your conveyancer in the first instance. At Enact, we’re always happy to guide our customers through the conveyancing process.

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