Are you aware of the new Land Transaction Tax?
Although it is coming into effect in April, it is still not widely known that the UK-wide Stamp Duty Land Tax (SDLT) is to be replaced in Wales with the Land Transaction Tax (LTT). So what is the difference and, more importantly, what are the rates?
According to the Welsh Government, the changes have been made to make the tax simpler and fairer. It is believed this will improve efficiency and effectiveness whilst focusing on Welsh needs and priorities.
The new Land Transaction Tax follows a similar structure to stamp duty, but aims to assist those buyers in Wales purchasing a property under £180,000. Mark Hayward, Chief Executive or NAEA Propertymark, stated, “The National Association of Estate Agents (NAEA) welcomes the new powers for the Welsh Government to collect Land Transaction Tax (LTT) receipts, as it will have a largely positive impact on the residential housing sector in the region. The introduction of the new initiative will create a fairer system and in turn increase the desirability of Welsh property.
“While, in the longer term, it may lead to an increase in house prices as demand rises, it will increase revenue for the Welsh Government which can be used to regenerate communities across the region. It will also ensure that the Welsh residential market remains healthy, which will be a boost to NAEA’s members across the border.”
The rates for residential property are as follows:
Residential LTT rates
Main residential rates
£0 - £150,000
£150,000 - £250,000
£250,000 - £400,000
£400,000 - £750,000
£750,000 - £1.5m
It is estimated that by increasing the tax threshold, the average first-time buyer will not pay any LTT at all. In fact, those buyers purchasing a residential property up to the value of £400,000 will pay the same rate of tax, or less, than those paying stamp duty. What’s more, the average home buyer can pay almost £500 less with LTT than SDLT.
Just as with the stamp duty regime, those buyers purchasing an additional property will be subject to an additional 3% levy on top of their main residential LTT rate.
Although the LLT will be advantageous to many, it will have an impact at the higher end of the market due to the increase in rates. We are starting to see more movement in the higher end of the market as vendors look to buy new a home before the LLT rates are implemented in April. Our teams are at your disposal to help with your property search, so visit your local branch to discuss your requirements.
If you are still unsure about how the Land Transaction Tax will impact on your purchase after April, come and chat to a member of our sales team.