The Welsh Government has announced that from April 2018, Stamp Duty Land Tax will be replaced with a Land Transaction Tax.
The Land Transaction Tax, part of an initiative to establish devolved tax arrangements in the country, will be Wales’ first new tax for almost 800 years.
An official statement from the Welsh Government confirms that the new legislation will be ‘broadly consistent’ with the existing UK stamp duty framework.
It says new tax rates will be confirmed closer to the April 2018 introduction of the new system in order to reflect economic conditions at that time.
The bill makes provision for Welsh Ministers to set rates and bands for the tax in secondary legislation, something which could have a more significant effect on the Welsh property market.
The statement also notes that the higher rates of stamp duty introduced on April 1 this year, which require an additional 3% stamp duty on the purchase of second homes and buy-to-let properties, are ‘under consideration’.
The Welsh Government believes the new devolved system will provide an opportunity to better reflect the circumstances in the country.
The impact assessments document accompanying the bill says the transaction tax aims to be ‘efficient’, while reflecting the ‘wider social and economic circumstances in Wales’ and ‘generate sufficient revenues to support Welsh public services’.
Welsh property sales currently raise between £100 million and £235 million each year in stamp duty revenue.
“This is a tax which affects so many of us. By replacing stamp duty land tax with a new made-in-Wales land transaction tax, public services in Wales will continue to benefit from the revenues raised by this important tax,” said finance secretary Mark Drakeford.
Wales follows Scotland’s lead after a Land and Buildings Transaction Tax (LBTT) was introduced in April 2015.
The Scottish system has a threshold of £135,000, as opposed to the £125,000 currently set as part of Stamp Duty Land Tax.
Purchasers of Scottish property priced between £135,000 and £250,000 pay just 2% in LBTT, while transactions over £1 million require a tax of 12% to be paid.
The bill for the Land Transaction Tax in Wales was introduced into the National Assembly yesterday and is expected to receive Royal Assent next year before being introduced in April 2018.