After 10th October 2022, residential properties sold in Wales will be subject to a few changes in Land Transaction Tax (LTT) which replaced the Stamp Duty Land Tax (SDLT) in Wales in 2018.
The Land Transaction Tax is collected and managed by the Welsh Revenue Authority (WRA), a non-ministerial department of the Welsh Government.
What is the Land Transaction Tax (LTT)?
The Land Transaction Tax is a charge paid by the purchasers of a freehold or leasehold property. The amount paid varies depending upon the amount paid for the property. LTT also applies if you transfer land or property in exchange for payment, such as if you take on a mortgage or buy a share in a house.
What Are the New Tax Bands?
From the 10th October in Wales, Land Transaction Tax bands for the purchase of residential properties are:
|
House Value
|
Stamp Duty
|
|
£0 to £225,000
|
0%
|
|
£225,001 to £400,000
|
6%
|
|
£400,001 to £750,000
|
7.5%
|
|
£750,001 - £1.5m
|
10%
|
|
£1.5m +
|
12%
|
How is Land Transaction Tax Different to Stamp Duty?
The changes announced to Stamp Duty in the September 2022 mini-budget, laid out by Chancellor Kwasi Kwarteng, significantly reduces the impact of Stamp Duty on home-buyers, with additional consideration for first-time buyers.
The threshold at which Stamp Duty is made applicable has immediately been doubled from £125,000 to £250,000. The new rates are therefore:
|
House Value
|
Stamp Duty
|
|
£0 to £250,000
|
0%
|
|
£250,001 to £925,000
|
5%
|
|
£925,001 to £1.5m
|
10%
|
|
>£1.5m
|
12%
|
Homeowners will now save £2,500 on the first £250,000 of the home value in comparison with the previous Stamp Duty rates.
First time buyers additionally benefit from 0% Stamp Duty on the first £425,000 value of the property, under the condition that the property be valued under £625,000. This has risen from a tax exemption on the first £300,000 for properties under £500,000 in value.
Additional rates apply for landlords and second homeowners of an additional 3% at each threshold level, as follows:
|
House Value
|
Stamp Duty
|
|
£0 to £250,000
|
3%
|
|
£250,001 to £925,000
|
8%
|
|
£925,001 to £1.5m
|
13%
|
|
>£1.5m
|
15%
|
Is the LTT 0% Rate Only Applicable for First Time Buyers?
The new LTT thresholds will be available to everyone, not just first-time buyers.
Will There be a Rate for Purchasers of Additional Residential Properties?
Yes, purchasers buying an additional residential property in Wales will be subject to an additional rate of Land Transaction Tax of 3%, which is the same as the Stamp Duty Land Tax in England.
If you sell your old residence within 3 years of buying your new property, you will still be able to claim back the higher rate of tax, however now you’ll have 4 years to claim it back.
Thinking of Moving and Have More Questions?
Our experienced and friendly conveyancing solicitors are always happy to help make the moving process as easy as possible, and can answer all your questions about the Land Transaction Tax changes. Get in touch today.
