Changes To Welsh Stamp Duty

Date Added 05.04.18

From the 1st April 2018, Stamp Duty in Wales will be no more. Now, do not get too excited about this as the Senedd, or Welsh Assembly Government, has simply replaced it with Land Transaction Tax, their own version of Stamp Duty.

This new tax will come into force on 1st April 2018 and will apply to all properties bought in Wales from that point on. In addition to the new tax, the Senedd has also set up a new governing body to regulate the tax and this will be called the Welsh Regulation Authority.

As with the current Stamp Duty Land Tax, the Land Transaction Tax will be payable on any residential property transaction in Wales. The tax will therefore apply to any property which can be considered to be used or suitable for use as a dwelling or land that forms part of the garden.

There will be some changes to the rates of tax payable under the new rules, some of which will be of benefit to purchasers and some which will not.  For transactions below the sum of £180,000.00 no stamp duty will be payable for main residences, although due to the higher starting threshold, there will be no First Time Buyer relief available.

This means that if a first time purchaser looks to buy a property for more than £180,000 in Wales, they will be subject to the Land Transaction Tax.

We understand from the current information available that there will be less tax payable for purchases made for less than £250,000 and the tax payable for properties valued at between £250,000 and £400,000 will be the same as that of the current Stamp Duty.

Unfortunately for those purchasing properties worth over £400,000, the cost levied in respect of the Land Transaction Tax will be higher than that in England.  Apparently, the Senedd believed that there would not be too many high value transactions within Wales!

Additional residential properties (or second homes) will still be subject to a higher rate of Tax, although it will still be possible to reclaim the additional Tax from the Welsh Regulation Authority if you sell a main residence within three years of purchasing the new main residence.

For those properties which straddle the border (known as cross border transactions), it becomes a little more complicated.  There is now a definitive map held by H M Land Registry showing the border between England and Wales, meaning that it should be possible to establish exactly where the border falls within boundaries of a property.  From the information we have been given to date, tax payable on the property will need to be split or ‘apportioned’ in accordance with how much land is on either side of the border.  Buyers will have to pay Stamp Duty on the land in England and Land Transaction Tax for the land in Wales.  This will mean submitting two separate Tax forms, one to H M Revenue and Customs and one to the Welsh Regulations Authority.

It has been suggested that the best way to work out the value of such land is to employ a land surveyor who will be able to provide accurate figures to the buyer.  There has been no indication as to who would be responsible for such an action but it may be that the additional cost could put off potential buyers if they are expected to pay the whole cost of such a survey.

There will, of course, be other considerations to take into account in respect of the Land Transaction Tax, and I think it fair to say that this is going to be an interesting few months whilst we all come to grips with the new Regulations.

If you require advice or assistance purchasing property in Wales, Talk to Tollers.

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