In April 2018, Stamp Duty Land Tax (SDLT) was devolved to Wales. The Welsh Government replaced SDLT with Land Transaction Tax (LTT) and it is responsible for any changes to LTT in Wales.
LTT applies to property purchases in Wales and has different tax rates and bands to SDLT which is paid in England and Northern Ireland.
The Welsh Government published its LTT rates and bands for 2020-21 in its most recent budget. The budget set out the rates and bands for purchasing residential properties as shown below.
Table 1. Residential LTT rates and bands for 2020-21
| Threshold | LTT rate |
| £0 - £180,000 | 0% |
| £180,001 - £250,000 | 3.5% |
| £250,001 - £400,000 | 5% |
| £400,001 - £750,000 | 7.5% |
| £750,001 - £1.5m | 10% |
| Over £1.5m | 12% |
Property tax changes
On 8 July 2020, the UK Chancellor Rishi Sunak announced in his Summer Statement that residential property transactions up to £500,000 would be exempt from UK SDLT in England and Northern Ireland until 31 March 2021. Previously this exemption only applied to property transactions up to £125,000.
In response to these changes, the Welsh Government’s Minister for Finance and Trefnydd, Rebecca Evans MS, announced that the Welsh Government would raise the LTT tax exemption threshold from £180,000 to £250,000 for residential property transactions in Wales until 31 March 2021.
The Minister commented that the change “will take effect on 27 July to coincide with the full reopening of the housing Market in Wales”.
Table 2. Changes to residential LTT rates and bands for 2020-21
Unlike SDLT, the change to the LTT tax exemption threshold in Wales will not apply to the purchase of additional properties such as buy-to-lets and second homes which have to pay an additional 3% in tax on top of the existing rate for their value shown in Table 1.
The Minister stated “the new threshold will mean that no tax will be paid on around 80% of transactions in Wales where the main residential rates apply”.
Article by Christian Tipples, Senedd Research, Welsh Parliament
