News Taxing Times
Published by Natalie on 19th September, 2017
Stamp Duty Land Tax will soon be replaced by the new Land Transaction Tax in Wales. Make sure you understand what taxes are due at the time of selling your property.
From April 2018, Land Transaction Tax will replace UK Stamp Duty Land Tax in Wales. Like Stamp Duty, Land Transaction Tax will be payable when you buy or lease a building or land over a certain price. It will affect all house buyers and sellers.
Although the exact rates haven’t been published yet, the legislation is broadly consistent with existing Stamp Duty legislation but changes are being made to simplify the tax and make it fairer, improve its efficiency and effectiveness and focus on Welsh needs and priorities. We look forward to seeing the detail.
We will keep you up to date with the new legislation but meanwhile, you must continue to pay Stamp Duty if you buy a property or land over a certain price. The current threshold is £125,000 for residential properties and £150,000 for non-residential land and properties.
How much you pay depends on whether the land orproperty is residential, non-residential or mixed-use. You can use HM Revenue and Customs’ (HMRC) Stamp Duty Land Tax calculator to work out how much tax you’ll pay here
The current rates (September 2017) are:
Up to £125,000 No charge
The next £125,000 (the portion from £125,001 to £250,0002%
The next £675,000 (the portion from £250,001 to £925,000)5%
The next £575,000 (the portion from £925,001 to £1.5 million)10%
The remaining amount (the portion above £1.5 million)12%
For example, if you buy a house for £275,000, the Stamp Duty you owe is calculated as follows:
0% on the first £125,000 = £0
2% on the next £125,000 = £2,500
5% on the final £25,000 = £1,250
Total payable = £3,750
You or your solicitor must send a Stamp Duty Land Tax return to HMRC and pay the tax within 30 days of completion. If you have a solicitor, agent or conveyancer, they’ll usually file your return and pay the tax on your behalf on the day of completion and add the amount to their fees.
It is worth remembering that there are higher rates for additional properties.
You’ll usually have to pay 3% on top of the normal Stamp Duty rates if buying a new residential property means you’ll own more than one. You won’t pay the extra 3% if the property you’re buying is replacing your main residence and that has already been sold but if there’s a delay selling your main residence and it hasn’t been sold on the day you complete your new purchase then you’ll have to pay higher rates because you own two properties. You may be able to get a refund if you sell your previous main home within 36 months.
There are special rules if you own property with someone else or already own a property outside England, Wales and Northern Ireland so please make sure you take legal advice.