Stamp Duty set to be replaced in Wales
Posted 11 October 2016 by
Ben SalisburyA new Land Transaction Tax (LTT) is set to replace Stamp Duty Land Tax (SDLT) in Wales from April 2018. The LTT will allow Welsh ministers to set their own bands and rates of tax taking into consideration the particular needs of the Welsh property market.
It will be payable on the purchase or any lease of land over a certain price and will be the first Welsh tax for over 800 years.
Making the announcement to the National Assembly of Wales, Mark Drakeford, the Welsh finance secretary, said the new tax will broadly have the same structure as the existing Stamp Duty currently available in England and Wales. Scotland replaced Stamp Duty with the Land and Buildings Transactions Tax (LLBT) in April 2015.
The rates and bands for LTT will be announced nearer to its start date in April 2018 to allow for the economic conditions at that time. It's thought the ability of Welsh ministers to set their own rates and bands could have a significant impact on the Welsh property market.
In April this year, the British government introduced an additional 3% tax through SDLT to anyone buying a second home or buy-to-let property, a move which led to a rush of property buying before its introduction. The official statement from the Welsh Government noted this additional higher rate introduced by the UK government and said that the extra 3% stamp duty would be 'under consideration' with the new LTT.
In Scotland, only properties above £145,000 have to pay land tax compared to £125,000, the threshold for SDLT in the rest of the UK. At the same time, the highest 12% rate is payable on properties over £750,000 in Scotland, whereas in the rest of the UK, the 12% rate only applies to properties costing £1.5m and over. With the introduction of LTT in Wales, it means there is now even more variation of land tax rates in different parts of the UK.
Another reason for the introduction of LTT was the Wales Act of 2014 which meant that Stamp Duty was set to be abolished in 2018 and the Welsh government needed a new tax to keep receiving revenue through property sales. Current Stamp Duty revenue in Wales from the sale of homes and businesses is estimated to be around £250m each year. The LTT will be collected by a new Welsh Revenue Authority, not HMRC.
The Land Transaction and Anti-Avoidance of Devolved Taxes Bill is expected to receive Royal Assent by April 2017 with the new Land Transaction Tax beginning in April 2018.