April 2018 sees the introduction of LTT (Land Transaction Tax) which is the devolved Welsh governments equivalent of SDLT
Whilst the majority of reliefs and rules will mirror that of SDLT, there is one element of difference, the rates and the bandings, which are different to the current SDLT (UK) rates which are still applicable until April 2018.
The LTT rates (below) and a quick view reveals that lower valued properties gain a favourable saving under the LTT rates over current SDLT rates. But as properties get more expensive, they are taxed at a greater rate under LTT than currently under SDLT.
So if you or your business are considering a purchase of property - residential or commercial - in Wales, you may wish to consider buying sooner or waiting longer, depending upon the value of the transaction and the bandings into which your acquisition will fall.
Example - You wish to buy a factory for £249,000. If you buy that now, the SDLT would be £1,980 (2% of £99,000 as first £150,000 is Nil rate), under LTT rates that would be £990 (1% of £99,000). A small saving.
LTT Residential Rates
| Price Threshold |
Rate |
| £0 - £150,000 |
0% |
| £150,000 - £250,000 |
2.5% |
| £250,000 - £400,000 |
5% |
| £400,000 - £750,000 |
7.5% |
| £750,000 - £1,500,000 |
10% |
| £1,500,000 + |
12% |
LTT Non-Residential Rates
| Price Threshold |
Rate |
| £0 - £150,000 |
0% |
| £150,000 - £250,000 |
1% |
| £250,000 - £1,000,000 |
5% |
| £1,000,000 + |
6% |
As with SDLT, an additional 3% surcharge will apply for the purchase of additional residential properties - exactly the same rules as for SDLT and also the same reliefs (multiple dwelling relief, etc).
There will be no higher 15% rate, on the purchase of residential property over £500,000 by a “non-natural person” such as a company, as this is not seen as relevant for LTT. This differs from SDLT and may be useful for some.
Current SDLT Residential Rates
| £0 - £125,000 |
0% |
| £125,000 - £250,000 |
2% |
| £250,000 - £925,000 |
5% |
| £925,000 - £1,500,000 |
10% |
| £1,500,000 + |
12% |
Current SDLT Non-Residential Rates
| £0 - £150,000 |
0% |
| £150,000 - £250,000 |
2% |
| £250,000 + |
5% |
|
|
There may be opportunities to achieve efficient tax savings, depending upon your circumstances and timings. If you want to know more about LTT, SDLT or the Scottish equivalent (LBTT), how these taxes work and what impact they have on your business decisions, then do please get in touch.
