The higher residential rates of Land Transaction Tax (LTT) has risen by one percentage point across all bands from today. These adjustments take effect on 11 December. Taxpayers who have already exchanged contracts will still pay the previous rates, provided they meet the relevant transitional rules.
Welsh Government Statement : Mark Drakeford MS, Cabinet Secretary for Finance and Welsh Language: 10 Dec 24
"Welsh taxes are a vital part of our fiscal arrangements, contributing to the funding available for our spending plans, which are set out in the Draft Budget today as well as providing an important lever for some of our policy priorities.
Taken together, Welsh Rates of Income Tax (WRIT), Landfill Disposals Tax (LDT) and Land Transaction Tax (LTT) will contribute around £4bn to the Welsh Budget in 2025-26.
This statement outlines the key decisions we are proposing in relation to Welsh taxes."
Land Transaction Tax
The higher residential rates of Land Transaction Tax (LTT) are increasing by one percentage point across all bands in this Draft Budget. These changes will be made by regulations today and will come into force on 11 December. Those taxpayers who have already exchanged contracts will pay the former rates so long as they comply with the relevant transitional rules.
This change will result in the higher residential rates of LTT being set at, broadly, five percentage points above the main residential rates. This increase is estimated to raise an additional £7m in 2025-26, which will increase the funding available to invest in public services in Wales.
The changes to the rates are set out in Annex 1. The regulations are subject to the made affirmative procedure and the Senedd vote to give these rates permanent effect will be held in January.
I am not proposing changes to any of the other rates or bands of LTT.
The current starting threshold for the main residential rates of LTT remains at £225,000 still ensuring that around 60% of residential transactions are below the threshold for paying LTT.
The forecast revenues from LTT in 2025-26, as detailed in the Welsh Taxes Outlook published on 10 December, includes £2.6m of additional tax receipts because of additional resources being invested in the Welsh Revenue Authority. This will allow the Authority to expand its work to identify and rectify tax returns which seek to under report tax liability and then to recover those amounts.
In the New Year, I will lay draft regulations in the Senedd to make changes to the multiple dwellings relief (MDR) available on the purchase of two or more dwellings in Wales. These changes will ensure MDR claims will not be allowed where the Subsidiary Dwelling Exemption (SDE) is applied, so taxpayers subject to the SDE would pay the main residential rates on the total consideration, without the benefit of MDR. This is a first step to improving the regime underpinning the purchases of more than one property in a transaction. Further work will be carried out to consider MDR relief within the LTT regime over the coming year.
Draft regulations will also be laid today to extend the new LTT special tax sites relief currently afforded to the Celtic Freeport, to the relevant designated areas of the Ynys Môn Freeport. Those regulations are subject to the draft affirmative procedure and Senedd approval will be sought in January to ensure the relief is in place when the UK Government’s designation regulations come into force."
Mark Drakeford MS, Cabinet Secretary for Finance and Welsh Language
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