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.
The Tax Faculty
ICAEW's Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
More support on tax
ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.Sign up for TAXwireJoin the Tax Faculty
More from the Tax Faculty
Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly e-newsletter
Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.
Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.