Great news for movers in Wales! The temporary Land Transaction Tax (LTT) relief in Wales has been extended until 30th June to align with the additional time added to the Stamp Duty holiday.
The Welsh Government has announced that the Land Transaction Tax holiday will be extended to the end of June. This now means that in Wales, no tax will be payable on any residential properties purchased up to a value of £250,000 for the next three months. This is fantastic news and brings with it the opportunity to save hundreds, if not thousands. If you're thinking of moving, now is the time to do it.
Could you save thousands in Land Transaction Tax costs?
If you’re purchasing a home in Wales for under the £250,000 threshold, you’ll now pay absolutely nothing in Land Transaction Tax. If you’re purchasing a home in England, the Stamp Duty charges there apply.
The threshold for the Land Transaction Tax, which replaced Stamp Duty in Wales in 2018, was previously set at £180,000. Under the recent changes, it is estimated that more than 80% of Welsh home buyers will pay no tax at all.
Here’s everything you need to know about Land Transaction Tax and the new changes.
What is Land Transaction Tax?
Land Transaction Tax is the tax that must be paid when you purchase a property or a piece of land. It is collected by the Welsh Revenue Authority. Similar to England’s Stamp Duty, the amount of money required depends on the overall price of the property as well as factors like whether it is residential or non-residential and whether or not you are a first-time buyer or purchasing an additional dwelling.
How much would you usually pay?
The threshold for Land Transaction Tax was £180,000. Previously you would pay no tax on purchases under that threshold but then the portion over £180,000 up to and including £250,000, you would pay 3.5% tax. A further 5% tax should be paid on the portion over £250,000 up to and including £400,000 and then 7.5% tax on the portion over £400,000 up to and including £750,000. These new changes mean you now pay no tax on purchases under £250,000.
Benefits if you’re buying a home
These new changes mean you could save thousands in tax costs on your new property purchase. If, for example, you were purchasing in an area where the average house price is £250,000 you could save a whopping £2,450 in Land Transaction Tax costs by purchasing now, whilst the tax cut is in place.
Benefits if you’re selling a home
Sellers will find there's currently a record demand for their properties. Enquiries are up as buyers rush to meet the new extended deadline and save thousands in Land Transaction Tax. Some sellers are even putting up their asking prices in the hope that people will be able to pay more. Equally, when you come to purchase a new main home, you would usually have paid a higher level of tax as you’re not a first-time buyer. However, under these new tax changes, you could find yourself saving a tidy lump sum.
Our advice to buyers and sellers
Regional Director for Beresford Adams, Jonathan Williams, with over 30 years experience in property, gave us his take on this latest tax update:
‘The extension will come as a significant relief to people who were stuck in the middle of the buying and selling process. Sellers will find there’s currently record demand for their properties from prospective buyers. Enquires are up as movers rush to make these tax savings. If you’re looking to buy, you need to act quickly. Get the price agreed before some sellers put their prices up. Timing is everything. This really is a fantastic opportunity to purchase if you act now.’
So, what’s next?
The LTT extension will apply to transactions that complete from 1 April 2021 to 30 June 2021. From 1 July 2021 the LTT residential property transaction rates and thresholds will revert to those that applied prior to 27 July 2020.
Who knows when there will be an opportunity to save on Land Transaction Tax like this again? The tax change is designed to give the Welsh economy a shot in the arm and, at the same time, it brings with it the opportunity for buyers to save hundreds, if not thousands.
We want to reassure you that we are taking all the safety precautions necessary and following the latest government guidance so that everyone can continue to move safely throughout 2021.
Get in touch today to see how we can help you move, safely, and make these savings.