LAND TRANSACTION TAX CALCULATOR (WALES)
Now that the Welsh government has announced the first set of rates and bands for the forthcoming (April 2018) Land Transaction Tax (LTT), you can calculate LTT for the first time using this Land Transaction Tax calculator.
At this point (due to the limited information officially released), Land Transaction Tax calculations are confined to residential, freehold property transactions undertaken by a private individual (as opposed to a company).
You can use the Quick Calculator on this page to work out LTT due on such transactions and, via the toggle switch on the widget, compare it with existing SDLT.
Finally, if you need to calculate SDLT or LBTT - either quickly (common conditions) or in detail - visit the Home Page of this website.
Switch between LTT & SDLT
LAND TRANSACTION TAX IN WALES
by Jay Woods
The Welsh government is introducing Land Transaction Tax (LTT) in April 2018 as a direct replacement for Stamp Duty Land Tax (SDLT) in the Principality.
While it has not (as of this page's latest update) provided detailed documentation on the new "Welsh stamp duty", it has released the standard residential rates and bands (shown in the table below) and confirmed that a higher rate of an extra 3% will apply to second homes, although no detail as to the lower threshold for that higher rate has yet been revealed (presumably it will match the existing £40,000 level that applies to SDLT and Scotland's LBTT).
Key Features of LTT
- Freehold residential property will be zero-rated up to £180,000 (previously intended to be £150,000), in contrast to £125,000 for the present SDLT.
- LTT will be higher than SDLT for properties between £400,000 and £925,000, with 2 bands and rates replacing SDLT's single band and rate (more on this below).
- Second home transactions will entail an additional 3% (as per the present SDLT).
- Non-residential property will have an extra band, starting at £1,000,000 and with a rate of 6%, but its second band (£180,000 to £250,000) will be taxed at 1%, as opposed to SDLT's 2%.
- A simplification of the treatment of the rental component of new lease transactions - currently, SDLT accommodates this using the complicated Net Present Value methodology.
- NOTE: There will be no relief applicable to new home purchases made by first time buyers, but that relief will remain in place while the present SDLT applies (i.e. until April 2018).
Arguably LTT's most notable feature is the higher threshold on freehold residential property transactions bought by private individuals, which will be zero-rated up to £180,000, in contrast to the £125,000 threshold of SDLT - to complete the comparison, Scotland's LBTT threshold under the same conditions is £145,000. This higher threshold is ostensibly expected to save £500 of "stamp" tax on the average dwelling.
The other most visible early deviation from SDLT relates to mid-priced properties, with dwellings from £400,000 to £750,000 being taxed at 7.5% and from £750,000 to £1,500,000 taxed at 10%, both of which are higher than the 5% that applies to dwellings throughout that price range under SDLT.
The mid-priced dwelling LTT rates, however, are markedly less than those under Scottish LBTT. For a visual comparison of the three stamp duty variants, see the graphs on the Stamp Duty Rates page). In the meantime, to see the contrast between LTT and SDLT for residential, freehold dwellings acquired by private individuals, see the graphs below.
Land Transaction Tax and Anti-avoidance of Devolved Taxes (PDF document).
Lexocology Article on LTT, 5 Oct 2017.
LTT compared with SDLT
All of the graphs below refer to standard residential rates, with the transactions being undertaken by private individuals.
As the transaction price is split up into the various bands it transcends and the stamp duty rate for each respective band is applied to the amount of the transaction price within each band, an overall de facto stamp rate emerges for any given transaction price, as shown in the graph below.
The actual stamp tax due for any given transaction price is plotted below. If you are a prospective buyer of mid-to-high priced property in Wales, you might want to expedite it now while SDLT rates still apply.
|Price of property||LTT rate
(2nd home or BTL)
|up to £180K||0%||3%|
|£180K+ to £250K||3.5%||6.5%|
|£250K+ to £400K||5%||8%|
|£400K+ to £750K||7.5%||10.5%|
|£750K+ to £1.5M||10%||13%|
|Price of property||SDLT rate
(2nd home or BTL)
|up to £125K||0%||3%|
|£125K+ to £250K||2%||5%|
|£250K+ to £925K||5%||8%|
|£925K+ to £1.5M||10%||13%|
NOTE: For comparisons with Scotland's LBTT as well, see the graphs at the bottom of the Stamp Duty Rates page.