Land Transaction Tax in Wales

Land tax in Wales (like in the rest of the UK) is calculated on a percentage basis although the thresholds are slightly different. In Wales, buyers purchasing an additional residential property over £40,000 will incur a three per cent surcharge.

Helping to shape the LTT changes

Mark Hayward gave evidence during a session of the Welsh Assembly’s Finance Committee. He outlined the main challenges in implementing the bill and offered recommendations to ensure it is put into operation effectively. We called for:

• Tax bands and rates more suited to the value of property in Wales in comparison to England and Scotland
• Replicate SDLT processes and systems to provide stability and ensure that procedures used to collect and manage the tax continue to be understood.
• More guidance when land transactions involve the acquisition of a chargeable interest where the land is partly in Wales and England
• Wide reaching communication so people understand LTT is a replacement tax and not an additional one
• Retain current reliefs and exemptions under SDLT
• Online calculators and guidance for the sector

Watch the evidence session

Land Transaction Tax rates and bands

The rates and bands for LTT were announced as part of the Welsh Government's budget by the Cabinet Secretary for Finance and Local Government. Initially the starting threshold was set at £150,000 but the Welsh Government increased this to £180,000 after the UK Government announced stamp duty land tax relief for first-time buyers in the 2017 Autumn Budget.

Through our lobbying we called for a higher starting threshold and are pleased that the lower bands will benefit the market. However, LTT creates further bands for properties in excess of £250,000 and these properties will now attract a higher rate of stamp duty land tax than they would have done previously.

Purchases of second homes and buy-to-let property

We are disappointed that the Welsh Government has decided to take this decision and followed the rest of the UK in implementing this punitive regime for Buy to Let landlords. We have been highly supportive of the new devolved tax regime in Wales, precisely because it was a way that it could set its own tax agenda that works best for the housing sector in the region. In continuing with the surcharge, the Welsh Government is not making the most of its powers in order to increase the supply of homes that Wales so desperately needs.

On 14 July 2020, the Welsh Government announced changes to the residential rates and bands of Land Transaction Tax. Since 27 July 2020, the threshold for paying LTT was temporarily raised from £180,000 to £250,000.

The change was due to end in March but was subsequently extended to 30 June 2021. The temporary change does not apply to second homes or buy-to-let properties, which have to pay an additional three per cent in tax on top of the existing rate for their value.

Property cost	Main residence	Additional homes
£0 – £180,000	0%	3%
£180,001 – £250,000	0%	6.5%
£250,001 – £400,000	5%	8%
£400,001 – £750,000	7.5%	10.5%
£750,000 – £1.5m	10%	13%
£1.5m+	12%	15%

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