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Changes to the main residential rates and bands of Welsh land transaction tax

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Published: 11 Oct 2022 Update History

The Welsh Government has announced changes to the main residential rates and bands of land transaction tax. The new rates and bands apply to transactions with an effective date on or after 10 October 2022.

From 10 October 2022 the following applies:

  • the starting threshold for paying the main residential rates of land transaction tax (LTT) increases from £180,000 to £225,000; and
  • the first tax band will cover transactions from £225,000 to £400,000, taxed at 6% on the amount over £225,000.

The changes have been introduced earlier than planned as a result of changes to stamp duty land tax (SDLT) in England and Northern Ireland. It is estimated that following the increase in the LTT threshold, 61% of homebuyers in Wales will not pay LTT on their purchase.

While the starting threshold for LTT is increased, the previous 3.5% and 5% LTT main residential rate bands are replaced by a single, narrower 6% band. This means that from 10 October, the amount of LTT payable on a house purchase will be lower on purchases below £345,000, but higher where the value exceeds £345,000. Around 15% of property transactions in Wales currently exceed £345,000.

Price threshold LTT main residential rate for transactions with an effective date from 1 July 2021 to 9 October 2022  LTT main residential rate for transactions with an effective date on or after 10 October 2022 
The portion up to and including £180,000  0%  0%
The portion over £180,000 up to and including £225,000  3.5%  0%
The portion over £225,000 up to and including £250,000  3.5%  6%
The portion over £250,000 up to and including £400,000  5%  6%
The portion over £400,000 up to and including £750,000  7.5%  7.5%
The portion over £750,000 up to and including £1,500,000  10%  10%
The portion over £1,500,000  12%  12%

The LTT rates and bands for higher residential rate and non-residential transactions are unchanged from those effective from 22 December 2020. This means that, unlike SDLT in England and Northern Ireland, the benefit of the increased starting threshold does not apply to those purchasing second homes in Wales.

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