Things to watch for with this new Welsh tax
From April 1 land transaction tax has replaced stamp duty land tax in Wales.
In hindsight, the rules and regulations are broadly consistent with those which were applicable prior to April 1 in Wales, being that land transaction tax will be payable when you buy or lease a property/land over a certain price.
The main reasoning behind creating a devolved land transaction tax for Wales was to simplify the process, improve its efficiency and effectiveness and to focus on Welsh needs and priorities.
The tax rates for the new land transaction tax are relatively consistent with those of the previous stamp duty land tax. However, the main difference is that purchasers of commercial property worth more than £1 million will be charged an additional one per cent than those in England (totalling six per cent). In addition, commercial lease rents with a net present value of between £2 million and £5 million will see an additional charge of one per cent in comparison with England (totalling two per cent).
If you are purchasing residential property below £180,000 then land transaction tax will not be payable, in comparison with England where you would be charged two per cent. However, if you were to purchase a residential property in Wales for more than £400,000-£750,000 you would be charged 7.5 per cent in comparison with England where you would be charged five per cent.
With regards to commercial properties, including farm purchases, there is a reduction in the charge to land transaction tax for lower value properties (properties valued between £250,000 to £1m) in comparison with stamp duty land tax. However, land transaction tax is more expensive compared to the previous tax for commercial properties valued in excess of £1.1m.
If you are considering purchasing a property and would like to have an estimate of how much land transaction tax is payable, the Welsh Government has launched an online calculator which will provide you with this information: https://beta.gov.wales/land-transaction-tax-calculator
Elin Owen, trainee solicitor with Agri Advisor, which offers a range of legal and advisory services dedicated to providing specialist advice to farmers, landowners and those that live rurally
