New Land Transaction Tax Likely to Get Stamp of Approval From First Time Buyers in Wales
- AuthorEmma Gilroy
Major changes to Stamp Duty charges were brought in from 1 April 2018 in Wales, with a new system – called Land Transaction Tax - administered by the Welsh Government.
The move is being hailed as a big step for those in favour of more devolved powers, since this is the first Welsh-only tax to be introduced in almost 800 years. And the changes will have the most impact upon those buying homes at the lowest and the highest ends of the value scale.
While the new regime will, according to the Welsh Government, mean that nine out of ten buyers will pay the same or less than they do at the moment, there will be winners and losers.
The most welcome news for many will be that the starting threshold for paying property tax in Wales will be nudged up to £180,000 from the current £125,000 - so those buying at up to £180,000 will escape the tax altogether. This will be attractive to many first time buyers, since the average house price in Wales is £150,000.
However, home buyers in Wales who are buying a property worth £400,000 or more will pay more than their counterparts in England. There are some reports that this aspect of the plan is subject to ongoing debate by the Welsh Government.
As the new rulings stand, from April 2018 someone buying a £500,000 home in Wales will pay £17,450 in Land Transaction Tax, compared with £15,000 in England.
For properties worth more than £750,000, the new Land Transaction Tax bill will soar to 10 percent. Properties priced above £1.5m will be subject to a new rate of 12 percent.
Land Transaction Tax will also have a higher rate of tax for additional properties, such as second homes, buy to let’s etc as seen with stamp duty land tax. This higher rate will follow stamp duty land tax, being 3% on top of the usual percentage rate for each price band.
The current rates (England and Wales) are:
Up to £125,000 - no tax
Between £125k and £250k - 2 percent
Between £250k and £925k - 5 percent
Between £925k to £1.5m - 10 percent
Above £1.5m - 12 percent
The new rates in Wales from 1st April 2018
Up to £180,000 - no tax
Between £180k and £250k - 3.5 percent
Between £250k and £400k - 5 percent
Between £400k and £750k - 7.5 percent
Between £750k to £1.5m - 10 percent
Above £1.5m - 12 percent
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