Land Transaction Tax

Buying a property in Wales? You may need to pay Land Transaction Tax (LTT). Find out how LTT works for main homes, second homes and buy-to-lets.

Buying a property in Wales? You may need to pay Land Transaction Tax (LTT). Find out how LTT works for main homes, second homes and buy-to-lets.

Mark Gordon
From the Mortgages team
3
minute read
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Posted 18 AUGUST 2021

What is land transaction tax? 

Land Transaction Tax (LTT) is a tax on buying a property or land in Wales that’s worth over a certain amount.

Is Land Transaction Tax the same as stamp duty? 

It’s the Welsh version of stamp duty, but it’s not exactly the same – there are some differences in the detail. Stamp duty (Stamp Duty Land Tax – SDLT) is paid by property buyers in England and Northern Ireland. LTT replaced stamp duty for Wales in 2018. 

In Scotland, buyers pay Land and Buildings Transaction Tax.

Do I have to pay Land Transaction Tax? 

You’ll have to pay LTT if you buy a residential property costing more than £180,000 as your main home. The tax is payable in addition to the property price, whether or not you have a mortgage.

How much Land Transaction Tax do I need to pay? 

LTT goes up in bands. You pay the band rate on the portion of the purchase price that’s in that band. From 1 July 2021, if you don’t own another property the rates are:

Purchase price

LTT rate

0-£180,000

0%

£180,001-£250,000

3.5%

£250,001-£400,000

5%

£400,001-£750,000

7.5%

£750,001-1.5 million

10%

Over 1.5 million

12%

 

For example: if you buy a property costing £295,000, you’ll have to pay £4,700 in Land Transaction Tax. The amount is calculated like this:

0% up to £180,000 = £0

3.5% on £180,000 to £250,000 (£70,000) = £2,450

5% above £250,000 (£45,000) = £2,250

Total = £4,700

When do you not have to file an Land Transaction Tax return? 

You don’t need to file an LTT return if:

  • You’ve inherited a property.
  • A property is transferred to you from a spouse or civil partner after a separation or divorce.
  • The property costs less than £40,000.

What about LTT on second homes? 

If you’re buying a second home or a buy-to-let in Wales for more than £40,000, you’ll need to pay a higher rate of LTT – 4% on top of the standard rates. It works like this:

Purchase price

LTT rate

£40,000-£180,000

4%

£180,001-£250,000

7.5%

£250,001-£400,000

9%

£400,001-£750,000

11.5%

£750,001-1.5 million

14%

Over 1.5 million

16%

 

For example: supposing you’re buying a second home in Wales to use as a holiday home costing £350,000 – the LTT you’ll pay on the property is £21,450.

4% up to £180,000 = £7,200

7.5% above £180,000 to £250,000 (£70,000) = £5,250

9% above £250,000 (£100,000) = £9,000

Total = £21,450

You’ll need to pay the higher rate if your spouse or partner owns another property, even if you’re not buying the second property together.

Are there any exceptions to paying the higher rate of LTT? 

You won’t have to pay the higher rate of LTT if your second home:

  • costs less than £40,000
  • is a caravan, houseboat or mobile home
  • is a mixture of residential and non-residential space (like a shop with a flat above it or a working farm with land used for commercial gain)
  • is a freehold property with a lease on it that has more than 21 years left to run, held by someone unconnected to you.

Is there a Land Transaction Tax holiday? 

As part of the response to the COVID-19 pandemic, the Welsh government raised the threshold for paying LTT to £250,000. However, the ‘holiday’ ended on 1 July.

Can I get a Land Transaction Tax refund? 

If you buy a second property as your main home without selling your existing home, you’ll have to pay the higher rate LTT. You can claim back the difference between the higher and standard residential rate amounts if you sell your first property within three years.

Do first-time buyers have to pay full Land Transaction Tax? 

Yes. Unlike stamp duty in England, and Land and Buildings Transaction Tax in Scotland, there’s no LTT relief for first-time buyers.

When do I pay Land Transaction Tax? 

You need to pay the tax within 30 days after completing on your purchase. Your solicitor or conveyancer can do it on your behalf. Alternatively, you can fill in a paper LTT return and pay the tax yourself. 

Find the paper return at GOV.Wales

Make sure the payment is made on time, or you could be charged a penalty and interest.

How can I calculate Land Transaction Tax? 

The Welsh government has a Land Transaction Tax calculator on its website.

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