Land Transaction Tax (LTT) was introduced by the Welsh government in April 2018. It replaced Stamp Duty in the country and is a tax, which must be paid when you buy property costing more than a certain threshold. How much you pay depends on the purchase price of the home with additional rates for second properties.
If you’re new to buying property in Wales, we explain more about LTT, answer some frequently asked questions and give you an idea of how much you might pay, depending on your circumstances.
What is Land Transaction Tax (LTT)?
LTT is a tax paid by people buying residential property in Wales. It was introduced in April 2018, when it replaced Stamp Duty and is collected by the Welsh Revenue Authority on behalf of the Welsh government. Like Stamp Duty in England, it applies whether your home is leasehold or freehold and whether you’re buying with a mortgage or purchasing outright. You’ll pay LTT on your first home if it costs £225,000 or more. Equally, you’ll pay LTT if you’re buying a second home or buy-to-let that costs £40,000 and over
What are the LTT rates?
How much LTT you pay depends on which band the purchase price of your property falls into. If this is your first property or main residence, you’ll pay nothing on homes costing less than £225,000 – or the first £225,000 of your purchase.
You’ll pay 6% on the portion between £225,000 and £400,000, 7.5% on the portion between £400,000 and £750,000, 10% on the portion up to £1.5 million and 12% on purchases costing more than that.
The table below shows the property bands if you own a single property.
As an example, say you are looking to buy a first property in Anglesey costing £650,000.
You’d pay nothing on the first £225,000.
You’d pay the tax at 6% on the portion of the cost from £225,000 to 400,000 = 6% of 175,000 = £10,500.
Plus, you’d pay 7.5% on the portion from 400,000 to 650,000 so 7.5% of £250,000 = £18,750.
So, your tax bill would equal £29,250.
LTT for first-time buyers
Unlike in England, there are no LTT reliefs, exemptions or special rules for first time buyers of property in Wales, whether you are buying your own home or a buy-to-let. However, most first-time buyer properties in Wales fall within, or close to, the zero-banded threshold of £225,000.
LTT for buy-to-lets and second homes
As with other parts of the UK, people buying second homes need to pay an additional LTT charge. The charge applies to any second homes whether holiday properties or buy-to-lets. The higher rate of LTT applies to properties costing more than £40,000.
LTT rates for second properties
Purchase price
LTT Rate
less than £180,000
4%
£180,000 to £250,000
7.5%
£250,000 to £400,000
9%
£400,000 to £750,000
11.5%
£750,000 to £1.5million
14%
More than £1.5million
16%
LTT exemptions
The main LTT exemptions are for single properties costing less than £225,000 or second properties costing less than £40,000. There are no exemptions for first-time buyers. In addition, there are some cases where LTT reliefs can apply. Talk to your conveyancer if you think your purchase falls into one of these areas.
Your LTT will need to be paid to the Welsh Revenue Authority within 30 days of your completion date. To pay the tax you will need to submit a return on completion – usually this will be handled by your conveyancer. Even if your property is exempt from the tax, because it costs less than £225,000, you will still need to submit a return, though you won’t have any LTT to pay. If you don’t submit a return or pay on time you may be charged interest and penalties.
If you’re looking to buy or sell property in north Wales, talk to us. We’d love to show you our selection of properties in in Llangefni, Bangor, Holyhead, Gwynedd and Anglesey or give you a no-obligation market appraisal of your current home.
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