For the first time in 800 years, Wales will make their own taxes. The Welsh Government previously announced plans to replace the current Stamp Duty Land Tax system that is used in England and Wales and replace it with their own taxation.
This week, the Welsh Government announced their plans for the new Land Transaction Tax. One of the main changes that the Land Transaction brings is that the threshold of the 0% rate of tax will crease to £150,000.00 from the current amount of £125,000.00. This means that the average first time buyer will pay less tax than they would under the Stamp Duty System.
Although the new tax is likely to be beneficial for first time buyers, the amount of tax payable by people purchasing houses worth over £400,000.00 will significantly increase. It is estimated that somebody buying a bigger house could pay up to £17,500.00 more in tax than they would have under Stamp Duty Land Tax.
The below is a breakdown from Wales Online, which shows the difference in rates between the two regimes:
The current rates:
- Up to £125,000 no tax
- Between £125k and £250k 2%
- Between £250k and £925k 5%
- Between £925k to £1.5m 10%
- Above £1.5m 12%
The new rates in Wales
- Up to £150,000 no tax
- Between £150k and £250k 5%
- Between £250k and £400k 5%
- Between £400k and £750k 5%
- Between £750k to £1.5m 10%
- Above £1.5m 12%
The Welsh Government have announced that the new Land Transaction Tax will come into force on 1 April 2018.
If you have any queries regarding the new Land Transaction Tax, or the current Stamp Duty regime, please contact our specialist property lawyers on 01792 648111.
