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Land Transaction Tax

Reviewing the Land Transaction Tax applicable to land transactions occurring in Wales.

Land Transaction Tax is payable by the purchaser in a land transaction which occurs in Wales. At Numera, we can provide guidance on Land Transaction Tax in the London area.

Land Transaction Tax (LTT) is payable by the purchaser of property in Wales.

Who pays the tax?

LTT is payable by the purchaser of residential or non-residential property in a land transaction occurring in Wales. Stamp Duty Land Tax (SDLT) is payable on land transactions in England and Northern Ireland and Land and Buildings Transaction Tax (LBTT) on land transactions in Scotland. Please see the separate factsheets for information on SDLT and LBTT.

What is a land transaction?

A transaction will trigger liability to LTT if it involves the acquisition of an interest in land. This will include a simple conveyance of land, such as buying a house, creating a lease or assigning a lease.

LTT is operated by the Welsh Revenue Authority (WRA), and individuals who are liable to the tax must complete and submit an LTT return (see later).

When is the tax payable?

Individuals must send an LTT return and pay the tax due to the WRA within 30 days of the day after completion (or other effective date of the transaction). Penalties and interest may be charged if you fail to file your LTT return or pay the necessary tax within the 30 days after the day of completion.

In some circumstances, buyers are not required to send a LTT return or pay LTT. These include instances where:

  • no money has exchanged hands
  • a property is left to you and you are not required to make a payment for the transfer of the property
  • property ownership is transferred to you as a result of a divorce or the dissolution of a civil partnership
  • freehold property has been purchased for less than £40,000
  • a new or assigned lease of seven years or more is purchased, and the premium is less than £40,000 and the annual rent is less than £1,000
  • a new or assigned lease of less than seven years is purchased, and the amount you pay is less than the residential or non-residential LTT zero rate threshold.

What if my property straddles the England-Wales border?

For cross-border cases, a home buyer will only be required to pay SDLT on the English part of the transaction and LTT to the WRA for the Welsh part of the transaction.

LTT rates

The Welsh government temporarily raised the threshold at which LTT on residential properties is paid from £180,000 to £250,000, between 27 July 2020 to 30 June 2021. However the tax reduction in Wales did not apply to purchases of additional properties including buy to let and second homes. The threshold for non-residential rates increased from £150,000 to £225,000 from 22 December 2020 and are shown in the table below:

Non-residential (£) Band % Rate
0 - 225,000 0
225,001 - 250,000 1
250,001 - 1,000,000 5
Over 1,000,000 6

The residential rates shown in the table below applied between 27 July 2020 to 30 June 2021:

Residential (£) Band % Rate
0 - 250,000 0
250,001 - 400,000 5
400,001 - 750,000 7.5
750,001 - 1,500,000 10
Over 1,500,000 12

From 1 July 2021 the rates for residential property are:

Residential property (£) Band % Rate
0 - 180,000 0
180,001 - 250,000 3.5
250,001 - 400,000 5
400,001 - 750,000 7.5
750,001 - 1,500,000 10
1,500,000 and above 12

 

First-time buyers

Unlike SDLT and LBTT, LTT does not provide any relief for first-time homebuyers in Wales.

How we can help

If you are in the London area and are planning to enter into an arrangement to purchase land, we can advise you of the precise impact of LTT on the transaction, so please contact us.

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Numera is a trading name of Numera Partners LLP | Company Registration No. OC365787 | Place of Registration: England & Wales | Registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales.

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