10 April 2018 #Real Estate
From 1 April 2018, Stamp Duty Land Tax (SDLT) has been replaced for transactions relating to properties in Wales with Land Transaction Tax (LTT). LTT has been introduced pursuant to the Land Transaction Tax and Anti-avoidance of Devolved Taxes Act 2017.
LTT is chargeable on land transactions, defined as “acquisitions of chargeable interests”.
Chargeable interests are defined as either of the following (other than an exempt interest):
Exempt interests are defined as the following:
Leases
The following lease transactions involve the acquisition of a chargeable interest:
Separate calculations are required for rent consideration and non-rent consideration aspects of chargeable interests involving leases. LTT is not chargeable on the rent payable under a lease that is assigned unless the assigned lease benefited from a specified relief on grant.
Options and pre-emption rights
Unlike under the SDLT regime, the following are land transactions in their own right under LTT, separate from any land transactions that result from their exercise:
Options or pre-emption rights that constitute or form part of another land transaction – such as options contained in leases are not separately chargeable to LTT.
Cross-border arrangements
An acquisition of land that is partly in Wales and partly in England is treated as two separate land transactions:
Rates of LTT
Similar to the SDLT regime, LTT rates apply on a progressive (or slice) basis, i.e., only the chargeable consideration falling within a particular band is subject to the applicable rate of LTT for that band. The following rates apply:
1) Freehold acquisitions and premiums for transactions involving leases:
Non-residential and mixed-use
Chargeable consideration |
LTT rate |
Not more than £150,000 |
0% |
More than £150,000 but not more than £250,000 |
1% |
More than £250,000 but not more than £1 million |
5% |
More than £1 million |
6% |
Residential (first property)
Chargeable consideration |
LTT rate |
Not more than £180,000 |
0% |
More than £180,000 but not more than £250,000 |
3.5% |
More than £250,000 but not more than £400,000 |
5% |
More than £400,000 but not more than £750,000 |
7.5% |
More than £750,000 but not more than £1.5 million |
10% |
More than £1.5 million |
12% |
Supplemental 3% charge for acquisitions of additional residential property
Chargeable consideration |
LTT rate |
Not more than £180,000 |
3%* |
More than £180,000 but not more than £250,000 |
6.5% |
More than £250,000 but not more than £400,000 |
8% |
More than £400,000 but not more than £750,000 |
10.5% |
More than £750,000 but not more than £1.5 million |
12% |
More than £1.5 million |
15% |
*except for properties where the chargeable consideration is less than £40,000
2) Lease Rents
LTT is chargeable on rent payable for the grant of non-residential leases and on the grant of certain mixed-use leases. It is not chargeable on rent payable on the grant of residential leases.
Net present value |
LTT rate |
Not more than £150,000 |
0% |
More than £150,000 but not more than £2 million |
1% |
More than £2 million |
2% |
Calculation of LTT
The Welsh Revenue Authority has provided an online calculator to help with the calculation of LTT which can be accessed at https://lttcalculator.wra.gov.wales.
The above summary is intended as an overview only and is not to be relied upon in relation to a particular transaction. For transaction specific advice, please contact Rachel Krol.