Land Transaction Tax – The New Stamp Duty Land Tax for Wales

On 1 April 2018 in Wales SDLT will be replaced by the new Welsh Land Transaction Tax (LTT).

The new rates for the LTT have now been confirmed and there are transitional provisions in place.

The Welsh Revenue Authority (WRA) has published two pieces of guidance – the first gives guidance on land transactions; the second guidance on chargeable transactions and chargeable consideration.

LTT works broadly speaking in the same way as SDLT, but the rates are different for some values.

The headline for commercial property buyers is that for high-end properties worth over £1m, tax rates will be higher in Wales than in England (6% in Wales, 5% in England on the top slice of consideration over £1m).

Commercial rents with a net present value above £2m-£5 also attract an additional 1% charge, producing a rate of 2% instead of 1%.

There’s an additional band of 7.5% for residential properties slotting in between the 5% and 10% bands.

Here’s how the LTT rates compare to the SDLT rates.

Commercial Property - Premium

LTT		SDLT
Price	Rate	Price	Rate
£0-£150k	0%	£0-£150k	0%
£150,001-£250k	1%	£150,001-£250k	2%
£250,001-£1m	5%	£250,001+	5%
£1m+	6%

Commercial Property – Rent

LTT		SDLT
NPV	Rate	NPV	Rate
£0-£150k	0%	£0-£150k	0%
£150,001-£2m	1%	£150,001-£5m	1%
£2m+	2%	£5m+	2%

Residential Property – Premium

LTT		SDLT
Price	Rate	Price	Rate
£0-£180k	0%	£0-£125k	0%
£180,001-£250k	3.5%	£125,001-£250k	2%
£250,001-£400k	5%	£250,001-£925k	5%
£400,001-£750k	7.5%	£925,001-£1.5m	10%
£750,001-£1.5m	10%	£1.5m	12%
£1.5m+	12%

The additional 3% rate for buyers of additional residential properties applies equally to both regimes.

The WRA has provided an online calculator, like the one used for SDLT.

There are complex transitional provisions for transactions which exchanged before 1 April 2018, but where completion takes place after that date.

A just and reasonable apportionment of the chargeable consideration must be made where a transaction involves both land in Wales and land outside Wales – and two tax returns, one for LTT and one for SDLT.