Changes to Land Transaction Tax (LTT) rates and bands

The Welsh Government has announced changes to the higher residential rates, non-residential rates and bands, plus the temporary increase to the nil rate band will end on 31 March 2021.

The threshold of LTT will revert to the original rates and starting threshold of £180,000 from 1 April 2021. Transactions must be complete before this date to use the temporary reduction.

The higher residential rates of LTT will increase by one per cent across all bands on 22 December 2020. If buying a property is complete:

  • before 22 December, the previous rates of tax are paid
  • on or after 22 December the new rates apply

In most cases where the contract has already been exchanged, but not completed the previous higher rates will be able to be used.

Paying LTT will not apply if:

  • property is purchased for less than £250,000 (and no other property is owned)
  • a new lease is purchased for less than 7 years

Higher LTT rates are usually paid when both of the following apply:

  • residential property is purchased worth £40,000 or more and the purchaser already owns one or more other properties

Bands and rates

The Welsh Government has updated the rates and bands page and official tax calculator to include the new rates that come into effect on 22 December 2020.

For any specific questions relating to LTT contact the Welsh Revenue Authority for guidance.

Changes for non-residential property

From 22 December 2020 the zero-rate band of the tax charged for lease premiums and assignments, and freehold property transfers will increase from £150,000 to £225,000. Plus, the zero-rate band of the tax charged on the rent element of non-residential leases will increase from £150,000 to £225,000. The Welsh Government intend to increase the 'relevant rent' amount for the annual rent element of non-residential rents from £9,000 to £13,500 in February 2021.