In this brief guide, we are going to discuss Stamp duty in Wales.

Stamp duty in Wales (Land transaction tax)

The land transaction tax (LTT) has now replaced stamp duty in Wales. The stamp duty charges in Wales are 3.5% between £180,000 and £250,000, 5% between £250,000 and £400,000, 7.5% between £400,000 and £750,000, 10% between £750,000 and £1.5 million and 12% for anything over £1,500,000.

You will pay 0% on anything up to £180,000 and any additional properties you purchase for less than £40,00 will also be charged at 0%.

Any additional purchases or buy to lets between £40,000 and £180,000 will be charged at 3%.

Stamp duty in Wales (Land transaction tax) is chargeable regardless of if you are buying with a mortgage or buying outright with cash.

What can be defined as a residential property for land transaction tax?

  1. “Any building that is used or is suitable for use as a dwelling, or is in the process of being constructed or adapted for such use.
  2. Land that is or forms part of the garden or grounds of a dwelling (including any building or other structure on such land).
  3. An interest in or right over land that subsists for the benefit of a building within a dwelling, or of land within a dwelling.”

Example of the stamp duty in Wales (Land transaction tax)

For example, someone buying a property for £4000,000 would pay no tax on the value of the property up to £180,000, 3.5% tax on the property value between £180,001 and £250,000 and 5% on the property value between £250,001 and £400,000. 

In this case, the 2449.965total liability for Land and Buildings Transaction Tax (LTT) would be £9,950.

Stamp duty in Wales table (Land transaction tax)

Purchase price of the propertyRate of Land Transaction TaxBuy to Let/Additional Home rate *
£0 – £180,0000%3%
£180,001 – £250,0003.5%6.5%
£250,001 – £400,0005%8%
£400,001 – £750,0007.5%10.5%
£750,001 – £1,500,00010%13%
£1,500,000+12%15%

Under the new Land transaction tax structure, an additional property purchased for less than £40k will be charged at 0% tax. Any additional purchase between£40k to £180k will be charged at a rate of 3% on the full purchase price.

Land Transaction Tax in Wales

Land transaction tax replaced the stamp duty in Wales in April 2018. It was originally announced by the Welsh Government back in October 2017.

You pay land transaction tax in Wales when you buy or lease a building over £40,000.

The Land transaction tax system in Wales is very similar to the stamp duty structure in England and Northern Ireland.

Land transaction tax for buy to let and second homes

Just like with the stamp duty in England, additional properties are taxed at an additional rate of 3%. This could be second homes or buy to let properties.

The additional rate will be charged on the full purchase price of anything above the £40,000 threshold.

Land transaction tax on second homes

As mentioned above, those who are purchasing a second home will pay land transaction tax at an additional rate of 3% if the property is above £40,000.

The additional rate off land transaction tax will always be charged if you already own a residential property and are buying aa second home. It will still be charged if you are replacing your current home but you can then get a refund if you sell the original home within 36 months.

Your ownership of a property can be anywhere in the world, there is no limitation on it being Wales. 

This means if you own a property in South Africa and are buying your first property in Wales you will be charged an additional rate of 3%.

Your first and current home does not need to be a residential home, it could be:

  • A holiday home
  • A second home
  • Or a buy to let home

The only thing exempt when considering first homes are subsidiary dwellings which are within a principal property which you don’t own.

Replacing your current home

If you are currently replacing your second home and will have sold your second home within 36 months of buying your new one then you could claim back the additional rate of land transaction tax which you paid.

You will have to make a refund request to the Welsh revenue authority by submitting a Land transaction tax amendment and refund form. 

Your conveyancer could help you with this.

What if you are purchasing a home jointly?

If you are purchasing a home jointly and one of the parties already owns a home anywhere in the world and does not meet the exemptions listed below then the additional rate of land transaction tax will be applied to the whole purchase.

A joint purchase could be a spouse, a civil partner, cohabitants or any child or children of the previously mentioned groups.

The land transaction tax exemptions.

Below are the exemption criteria for the additional rate of land transaction tax

  • When you are immediately replacing the main residence
  • If the property you are buying is less than £40,000
  • If the transaction is for a subsidiary dwelling
  • Any transactions made by a court-appointed deputy for a minor child
  • If the property you are buying is non-residential or mixed-use.
  • If you still retain an interest in a formal matrimonial home after a divorce

You also won’t have to pay land transaction tax or file a return if any of the below apply:

  • “no money or other payment changes hands 
  • property is left to you in a will and you do not make any payment for the transfer of this property to you
  • property is transferred because of divorce or dissolution of a civil partnership
  • you buy a freehold property for less than £40,000
  • you buy a new or assigned lease of 7 years or more, as long as the premium is less than £40,000 and the annual rent is less than £1,000
  • you buy a new or assigned lease of fewer than 7 years, as long as the amount you pay is less than the residential or non-residential LTT zero rate threshold”

Land transaction for companies and trusts

Companies and trusts who buy a residential property in Wales will usually have to pay the additional rate of land transaction tax.

Companies and Trusts

Land transaction tax for leaseholds

The land transaction tax is the same for leasehold purchases as it is for freehold purchases in Wales. You will have to pay the standard rates on anything which is residential and a first home but the additional land transaction tax rate of 3% for anything which is a second home or a buy to let.

Land transaction tax Lease or rental of residential property

You won’t have to pay any land transaction tax for rent which you pay on a residential property.

Do first-time buyers have to pay stamp duty in Wales (Land transaction tax)?

Yes, first-time buyers will have to pay stamp duty in Wales as everyone else would, there is no first-time buyer relief in Wales.

When do you have to pay land transaction tax (stamp duty in Wales)?

You will have to pay land transaction tax (stamp duty in Wales) within 14 days of completing your property transaction.

If you have completed your transaction with a solicitor then your solicitor will help you pay for the land transactions tax.

If the price of your home is below £180,0000 you must still submit a land transactions tax return even if you have nothing to pay.

If you do not submit the land transaction return in time then you may be charged penalties by the Welsh revenue authority.

Use a stamp duty for Wales calculator (land transaction tax calculator)

You can use this calculator to give you an idea of the stamp duty you will need to pay in Wales when buying a freehold property.

You should only use this calculator for guidance.

FAQs: Stamp duty in Wales

Is stamp duty different in Wales?

Yes, stamp duty in Wales is different and has now been replaced by the land transaction tax.

Do first-time buyers pay stamp duty in Wales?

Yes, first-time buyers in Wales will pay stamp duty and not receive any first-time buyer stamp duty relief.

In this brief guide, we discussed Stamp duty in Wales.

If you have any questions or comments please let us know.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.