Updated rates for Land Transaction Tax

posted by Helen Bull

Residential -

The Welsh Government suddenly announced in their budget on the 21st December 2020 that from 22nd December 2020 there will be an increase in the amount of Land Transaction Tax payable for the purchase of additional residential properties or buy to let properties by an additional 1%. Land Transaction Tax is a tax paid by any purchaser buying properties in Wales. This change applies to all purchasers acting in their individual capacity, companies, LLP’s or trust entities. Please note that this change only applies to the purchase of second properties.

If a purchaser of a property had exchanged contracts before the end of 21st December 2020, but not yet completed, they should be able to pay the old rates of Land Transaction Tax on their additional property purchase (provided that the contract is not amended or varied between exchange and completion). If contracts are exchanged on or after 22nd December 2020, the purchaser is liable to pay the new rates of tax.

For example, on the purchase of a second property with a purchase price of £99,000:-

  • Contracts exchanged before 22nd December 2020

           =  £2970 of duty payable 

  • Contracts exchanged on or after 22nd December 2020 –

            = £3,960 of duty payable

Commercial

The Welsh Government have taken a different approach where commercial properties are concerned. It has been decided that the zero-rate threshold will increase from £150,000 to £225,000 from 22nd December 2020. The other bands and rates for commercial property will remain as before.

For more information on the points raised or if you would like tailored advice to your needs, please contact Kelly Cassemis in our property team.

Kelly Cassemis (Associate) – kcassemis@berrysmith.com