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First Welsh taxes in 800 years: the changes explained

Tax is changing in Wales, with the introduction of the first Welsh taxes for almost 800 years.

Under an agreement with the UK government on the devolution of tax powers, Wales will introduce its own land transaction tax and a landfill disposal tax from 1 April 2018. It will introduce its own rates of personal income tax from 2019.

 

Land transaction tax

From 1 April 2018, land transaction tax (LTT) will replace stamp duty land tax (SDLT) in Wales.

In the residential property market, the Welsh Government is keen to assist first-time buyers and has increased the residential nil rate band to £180, 000 from £125, 000 under the SDLT regime. However, the first residential tax band is 3.5%, not 2.5% as under the SDLT regime.

Generally speaking, LTT will be more expensive than SDLT on residential purchases of £400,000 and above, which account for just 6% of residential property transactions in Wales.

The introduction of higher commercial property rates for transactions in excess of £1 million will have a potentially more significant impact. The table below shows rates of LTT compared to SDLT:

 

Band

LTT rate

SDLT rate

£0 to £150,000

0%

0%

Over £150,000 to £250,000

1%

2%

Over £250,000 to £1 million

5%

5%

Over £1 million

6%

5%

 

Concerns have been raised that the additional 1% to the cost of buying high-value commercial property in Wales could put some developers and investors off.

 

Landfill disposals tax

From 1 April 2018, landfill disposals tax will replace landfill tax in Wales. It will be administered by the Welsh Revenue Authority and will be payable by landfill operators in Wales.

If you plan to purchase land or property in Wales on or after 1 April 2018, speak to our real estate solicitors about the arrangements for LTT.

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