What is Land Transaction Tax (LTT)?
When you buy a residential property or a piece of land in Wales, having value of more than £180,000 for buying first homes & more than £40,000 for buying second homes, you are liable to pay land transaction tax. It is applicable on both freehold & leasehold properties. It is levied on both - property you are buying right away or with a mortgage.
In case you are buying residential property or a piece of land in England or Northern Ireland, you are liable to pay Stamp Duty Land Tax whereas Land & Buildings Transaction Tax (LBTT) is charged when you buy residential property or piece of land in Scotland.
How much is Land Transaction Tax?
Land transaction tax comprises of several taxes rate bands. Land transaction tax is calculated on the basis of –- Purchase price of the property
- First time home buyer or second time home buyer
For Example – Suppose you bought a residential property for £300,000, value of land transaction tax will be –
Total Land Transaction Tax = £2,450 + £2,500 = £4,950
Land Transaction Tax Rates
Calculate land transaction tax on the basis of property value falling within each band –
| Purchase Value | Land Transaction Tax Rates (Main Residence) | Land Transaction Tax Rates (Additional Homes) |
| £0 - £180,000 | 0% | 3% |
| £180,001 - £25,0000 | 3.5% | 6.5% |
| £250,001 - £40,0000 | 5% | 8% |
| £400,001- £750,000 | 7.5% | 10.5% |
Land Transaction Tax on Second Homes
Additional residential properties include Second homes and buy-to-let properties. When you buy additional residential properties in Wales also known as second homes having value of more than £40,000, you are liable to pay land transaction tax. Land transaction tax paid on second homes is 3% extra than the tax charged on main residence.
Land Transaction Tax Relief for First Time Home Buyers
There is no relief provided to the first time buyers in Wales for land transaction tax
Pay Land Transaction Tax
When you need to pay Land Transaction Tax?
When you buy a residential property or a piece of land in Wales, you need to file land transaction tax return & pay the land transaction tax to the Welsh revenue authority. In case of late or non-submission of paying land transaction tax, welsh revenue authority may charge you with penalties along with the interest.
When Land Transaction Tax is not payable?
If your property value is less than £180000, you may avoid paying land transaction tax to the Welsh revenue authority. There are many situations in which land transaction tax is either not payable or reduced to some extent. They are as follows –
- Slightly over rate band – If the price of the property lies into a slightly higher tax rate band category, you can ask the seller or estate agent to accept a slightly lower price.
- Property transfer due to separation or divorce – If you are divorcing or separating from your spouse or partner due to court order or an agreement, you are not entitled to pay land transaction tax in case you transfer the proportion of your home value to them. If the joint owners are unmarried at the time of transferring the interest in land or property to some other joint owner, you may have to pay Stamp Duty Land Tax (SDLT).
- Transfer of deeds – There is no need to pay land transaction tax to welsh revenue authority when you get property or piece of land by will. This is applied even when there is outstanding mortgage on the property at the time of death of the person. If you are getting property as a gift and there is no outstanding mortgage on it, you don’t have to pay land transaction tax. In case you take over the part or the entire existing mortgage, you will be liable to pay land transaction tax (If mortgage value is more than the land transaction tax). However, in case of exchange of property with another person, each of you needs to pay Land Transaction Tax (LTT) based on the market value of the received property.
How to Pay Land Transaction Tax?
You can pay your land transaction tax return yourself or with the help of the solicitor. In both the cases, you will be held responsible for timely submission of land transaction tax return.
In case your property value is less than £180000 and you are not paying any Land Transaction Tax (LTT), still you need to submit Land transaction return to the Welsh authority.
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