Stamp Duty in Wales

Just when home buyers had become acquainted with the increasing complexity of Stamp Duty Land Tax (SDLT), those living in Wales – or even those whose properties straddle the border between England and Wales (a not uncommon phenomenon) – will have to become conversant with Welsh Land Transaction Tax (LTT).  The Welsh Revenue Authority will collect and manage LTT from April 2018 when it replaces SDLT in Wales.

On 3 October the Welsh government published the rates and bands of LTT. The table sets out the rates of LTT on transfers of residential property, together with those of SDLT as comparison. As with SDLT, an additional 3% of LTT will be charged for additional residential property

Consideration LTT rate SDLT rate
£0 to £125,000 0% 0%
Over £125,000 to £150,000 2%
Over £150,000 to £250,000 2.5% 2%
Over £250,000 to £400,000 5% 5%
Over £400,000 to £750,000 7.5% 5%
Over £750,000 to £925,000 10% 5%
Over £925,000 to £1.5 million 10%
Over £1.5 million 12% 12%

At least first-time buyers in Wales should welcome this news as the threshold for paying LTT on residential purchases starts at over £150,000, which is higher than that for SDLT.  According to the Welsh government, buyers of residential properties up to £400,000 should not pay any extra under LTT, with nine out of ten home buyers paying the same or less under LTT than under SDLT, and that the average home buyer will pay nearly £500 less.  However properties between £400,000 and £750,000 will be paying at least an extra 2.5% and those from £750,000 to £925,000 will, at 10%, be charged twice the rate of SDLT.  Whether this will impact on house prices in Wales – particularly near the border where buyers could possibly choose a property in England – only time will tell.

For purchases of non-residential property, the Welsh government comments that Wales will have the lowest starting rate of tax in the UK and that all businesses buying premises up to the value of £1.1 million will pay either no LTT or up to £1,000 less under LTT than under SDLT.

To discuss this further, please contact Wendy Govier Wright on 01989 561 406 or email her on wgwright@hcrlaw.com

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Author
Wendy Govier Wright
Senior Associate
Direct Dial: +44 (0) 1989 561 406
Mobile: +44 (0) 7966 639 582
Email: wgwright@hcrlaw.com