New Land Transaction Tax from 1 Aril 2018 replaces Stamp Duty Land Tax

Land transaction tax (LTT), which comes into effect on 1 April 2018 in Wales, replaces stamp duty land tax, which is currently applied in England, Northern Ireland and Wales. Under the new system, the starting threshold for paying property tax will be £150,000 – compared with £125,000 at present.

In the latest UK House Price Index for July, the average price of a property in Wales was £150,846 – just above the new property tax limit.

Under the new rules, announced as part of the Welsh government budget for 2018-19, all buyers of residential properties costing up to £400,000 will pay the same or less tax than they currently do, with the average buyer paying almost £500 less tax than they do under stamp duty land tax.

However, buyers looking for homes on the upper band rates between £400,000 and £925,000 will pay more than at present. For example, a buyer purchasing a property in Wales for £400,000 would currently pay 5% stamp duty, but this will rise to 7.5% under the new rules.

The additional tax for buying a second property will remain the same – at 3% on top of each band.

New land transaction tax rates in Wales from April 2018:

Price threshold Main residential rates

£0 - £150,000                0%

£150,001 - £250,000      2.5%

£250,001 - £400,000      5%

£400,001 - £750,000      7.5%

£750,001 - £1.5 million   10%

Above £1.5 million          12%

Current stamp duty rates in England & Wales:

Price threshold Main residential rates

£0 - £125,000                 0%

£125,001 - £250,000       2%

£250,001- £925,000        5%

£925,001- £1.5 million     10%

Above £1.5 million           12%

Note: In both cases, it is a tapered system so, for example, if you currently buy a house for £275,000, the stamp duty you will owe is: 0% on the first £125,000, 2% on the next £125,000 and 5% on the next £25,000, totaling £3,750.

Laura Davies, Branch Manager in Morriston welcomes the changes, even though she admits it’s not good news for all house buyers.

“The rate up to which buyers will not have to pay any stamp duty will be £150,000 from April 2018 – the same value as the average house price in Wales. This means a huge number of house buyers will no longer have to pay any stamp duty at all. However, the move creates further bands for properties in excess of £250,000, and those properties will now attract a higher rate of stamp duty land tax than they would have previously.”

Thank you for everything. The service, professionalism and effort has been above what would be expected. Thank you. Richard & Laura
Mr Richard Price-Deer
(Cae Castell, Loughor, Swansea)