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Wales to cut tax on average house sale

Wales will collect its first national taxes for almost 800 years from 1 April 2018 when the new Welsh version of stamp duty comes into force.

From 1 April 2018, the UK’s stamp duty land tax will be replaced by the land transaction tax (LTT) for residential and non-residential property purchases in Wales.

The current tax-free threshold for residential and non-residential homes in the UK is £125,000. 

This will soon rise to £150,000 from 2018/19 tax year under LTT in Wales after the decision to scrap tax on homes costing between £125,000 and £150,000 was revealed in the Welsh Budget.

If an individual was to purchase a property in Wales from April 2018 for the average house price of £150,846, they will pay just £21.15 in LTT - compared to £516.92 in UK stamp duty. 

However, at the other of end of the scale homeowners can expect to pay more. For instance, a housebuyer paying £500,000 for a home after April 2018 can expect to pay £17,500 in LTT - £2,500 more than existing stamp duty. 

Both residential and non-residential transactions are subject to different rates, with a main rate and higher rate on additional residential properties, such as second homes and buy-to-let properties. 

The higher rate is 3% above the main residential rate for each band:

Residential rates

Price threshold Rates
£0 to £150,000 0%
£150,000 to £250,000 2.5%
£250,000 to £400,000 5%
£400,000 to £750,000 7.5%
£750,000 to £1.5 million 10%
Above £1.5 million 12%

Non-residential rates

Price threshold Rates
£0 to £150,000 0%
£150,000 to £250,000 1%
£250,000 to £1 million 5%
Above £1 million 6%

Mark Drakeford, Welsh government finance secretary, said:

“Using these new powers, we have been able to introduce progressive and innovative tax plans, which will make a real difference to people’s lives, change behaviours and deliver improvements to all our communities.”

Contact us for stamp duty advice.

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