From April 1st 2018, The New Land Transaction Tax will replace UK Stamp Duty Land Tax in Wales.
Like Stamp Duty, Land Transaction Tax will be payable when you buy or lease a building or land over a certain price. It may affect house buyers and sellers and businesses including builders, property developers and agents involved in the transaction process (such as solicitors and conveyancers).

The legislation is broadly consistent with Stamp Duty, preserving the underlying structure and mirroring key elements such as partnerships, trusts and reliefs, to provide stability and reassurance to businesses and the property market.

Changes have been made to:

Simplify the tax and make it fairer
Improve its efficiency and effectiveness
Focus on Welsh needs and priorities.

The rates of tax

The tax rates and tax bands for Land Transaction Tax are available below.

There are different tax rates and bands for different types of property.

Land Transaction Tax main residential tax rates – freehold transactions

When you buy a residential property the following rates will apply to the portion of the price1 you pay in each band.

Price threshold

Land Transaction Tax rate


The portion up to and including £180,000

0%


The portion over £180,000 up to and including £250,000

3.5%

Currently 0% until 30th June 2021

The portion over £250,000 up to and including £400,000

5%


The portion over £400,000 up to and including £750,000

7.5%


The portion over £750,000 up to and including £1,500,000

10%


The portion over £1,500,000

12%


For example, if you buy a house to which the main residential rates apply for £260,000, you will pay 0% on the first £180,000, 3.5% on the next £70,000 and 5% on the final £10,000 – the total Land Transaction Tax will be £2,950.

You can use the WRA tax calculator to work out how much tax you will pay. Link is below.

Land Transaction Tax main residential tax rates – leasehold transactions

When you buy a residential leasehold property you may need to pay Land Transaction Tax on the purchase price of the lease (the ‘lease premium’) using the rates above. There is no Land Transaction Tax payable on rents payable under a lease for residential property.

Land Transaction Tax higher residential tax rates

When you buy a residential property and you already own one or more residential properties you may need to pay the higher residential rates. However, if you are replacing your main residence the higher rates may not apply.

When companies buy residential properties they will have to pay the residential higher rates and when trusts buy residential properties they may have to pay the residential higher rates.

The Land Transaction Tax higher rates are 3% on top of the main residential rates.

For example, if you buy a second home for £260,000 you will pay 3% on the first £180,000, 6.5% on the next £70,000 and 8% on the final £10,000 – the total Land Transaction Tax will be £10,750.

You can use the Welsh Revenue Authority tax calculator to work out how much tax you will pay.

Land Transaction Tax non-residential property main rates – freehold transactions

When you buy non-residential property such as shops, offices, or agricultural land the following rates will apply to the portion of the price you pay in each band.

These rates also apply to ‘mixed use’ property such as a flat above a shop when both the residential and non-residential properties are part of the same transaction.

Price threshold

Land Transaction Tax rate  

The portion up to and including £150,000

0%

The portion over £150,000 up to and including £250,000

1%

The portion over £250,000 up to and including £1,000,000

5%

The portion over £1,000,000

6%

For example, if you buy a shop for £400,000, you will pay 0% on the first £150,000, 1% on the next £100,000, and 5% on the final £150,000 – the total Land Transaction Tax will be £8,500

You can use the WRA tax calculator to work out how much tax you will pay.

Land Transaction Tax non-residential property – leasehold transactions

When you buy a non-residential leasehold property you may be required to pay Land Transaction Tax on the purchase price of a newly granted lease (the ‘lease premium’) using the rates above. However, if you also pay rent on the grant of a lease, rules may apply that remove the 0% threshold.

The rent over the term of a newly granted lease may be liable to Land Transaction Tax and is calculated on its net present value (NPV). You can use the WRA NPV calculator to work out the rental figure on which you pay tax.

Where tax is payable on rents due under the term of a lease, the following rates apply.

NPV threshold

Land Transaction Tax rate

The portion up to and including £150,000

0%

The portion over £150,000up to and including £2,000,000

1%

The portion over £2,000,000

2%

For example, if you are granted a new lease on an office with an NPV of £170,000, you will pay 0% on the first £150,000 and 1% on the final £20,000 – the total Land Transaction Tax will be £200.

You can use the WRA tax calculator to work out how much tax you will pay.

How much tax you’ll pay?

You can work out how much you need to pay using the Welsh Revenue Authority’s tax calculator.

Further guidance on Land Transaction Tax, including the rules and reliefs that may be available as well as how and when to file a return and pay tax, will be available on the Welsh Revenue Authority’s website. 

The Welsh Revenue Authority (WRA) will be responsible for collecting Land Transaction Tax and a tax calculator is available on the WRA website. Please click on the link below.

https://Land Transaction Taxcalculator.wra.gov.wales  

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