Those of you involved in the acquisition of properties in Wales over the next couple of months should take note – if the value is over £1,000,000 for non-residential properties (or for non-residential leases, a net present value of over £2,000,000) or £400,000 for residential properties, then you'll pay less tax if you can complete before 1 April 2018.
From 1 April 2018, SDLT will be replaced by Land Transaction Tax ('LTT') for properties in Wales, as part of the exercise by the Welsh Assembly of its new devolved tax powers. Whilst many details of the new regime are still to be finalised (we have yet to have sight of the new return, or any online calculators, for example), the LTT system will take on board much of the existing SDLT regime – in particular, the various reliefs remain the same, according to what we know so far. Tax will be collected by the new Welsh Revenue Authority.
The rates, however, are quite different, as you can see from the tables below – the Assembly has sought to follow a 'progressive' approach, in reducing tax for those purchasing cheaper properties, but increasing the tax payable on more valuable assets. For example, the starting threshold for the payment of LTT is set at £180,000, rather than £150,000 (with no specific reductions for first-time-buyers, as there is under SDLT).
Non-Residential Freehold Properties and Lease Premiums
| LTT | SDLT | ||
| Value | Rate | Value | Rate |
| £0 – £150,000 | 0% | £0 – £150,000 | 0% |
| £150,000 – £250,000 | 1% | £150,000 – £250,000 | 2% |
| £250,000 – £1,000,000 | 5% | >£250,000 | 5% |
| >£1,000,000 | 6% | ||
Non-Residential Leases
| LTT | SDLT | ||
| Net Present Value | Rate | Net Present Value | Rate |
| £0 – £150,000 | 0% | £0 – £150,000 | 0% |
| £150,000 – £2,000,000 | 1% | £150,000 – £5,000,000 | 1% |
| >£2,000,000 | 2% | >£5,000,000 | 2% |
Residential
| LTT | SDLT | ||
| Value | Rate | Value | Rate |
| £0 – £180,000 | 0% | £0 – £125,000 | 0% |
| £180,000 – £200,000 | 3.5% | £125,000 – £250,000 | 2% |
| £250,000 – £400,000 | 5% | £250,000 – £925,000 | 5% |
| £400,000 – £750,000 | 7.5% | £925,000 – £1,500,000 | 10% |
| £750,000 – £1,500,000 | 10% | >£1,500,000 | 12% |
| >£1,500,000 | 12% | [NB: 0% rate applies up to £300,000 and 5% for £300,000-£500,000, if you are a first-time buyer] | |
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.