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?
Land Transaction Tax is 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 £225,000 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. If you don’t own another property the rates are:
Residential property LTT (if you do not own other property)
Purchase price | LTT rate |
|---|---|
£0-£225,000 | 0% |
£225,001-£400,000 | 6% |
£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 £4,200 in Land Transaction Tax. The amount is calculated like this:
0% up to £225,000 = £0
6% on £225,000 to £400,000 (£70,000) = £4,200
Total LTT due = £4,200
When do you not have to file a 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 freehold property costs less than £40,000.
But you must send a LTT return, even if there’s nothing to pay, for all other transactions.
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:
Higher residential tax rates (when you already own one or more properties)
Purchase price | LTT rate |
|---|---|
£40,000-£180,000 | 5% |
£180,001-£250,000 | 8.5% |
£250,001-£400,000 | 10% |
£400,001-£750,000 | 12.5% |
£750,001-£1.5 million | 15% |
Over £1.5 million | 17% |
Rates apply to contracts exchanged on or after 11 December 2024. See GOV.Wales for rates before this date
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 £24,950.
5% up to £180,000 = £9,000
8.5% above £180,000 to £250,000 (£70,000) = £5,950
10% above £250,000 (£100,000) = £10,000
Total LTT due = £24,950
You’ll need to pay the higher rate if your spouse or civil partner owns another property, even if you’re not buying the second property together.
When do I pay Land Transaction Tax?
You need to pay the tax within 30 days after completing on your purchase. To do so, your solicitor or conveyancer will need to submit a Land Transaction Tax return to Welsh Revenue Authority. They’ll need to do this even if you don’t need to pay anything. You’re responsible for making sure it’s submitted on time and for paying what’s due.
If you’re not using a solicitor or conveyancer, you can fill in a paper LTT return yourself.
Contact the Welsh Revenue Authority if you want to file a paper return.
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.
If you’re buying six or more properties, you can usually choose to pay either:
Non-residential rates of LTT
Higher rates of LTT with multiple dwellings relief.
If you’re not sure what you need to pay, get advice from your solicitor or tax adviser.
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.
Make sure the payment is made on time, or you could be charged a penalty and interest.
How can I calculate Land Transaction Tax?
Use the LTT calculator on the GOV.Wales website to calculate how much Land Transaction Tax you may need to pay.
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