Wales has increased the rates of land transaction tax (LTT) on property sales with the change coming into immediate effect
In the draft budget, on 21 December 2020, the Welsh Government announced changes to the higher residential rates, and non-residential rates and bands, of LTT. The temporary increase to the nil rate band of LTT for residential property transactions will end on 31 March 2021.
The higher residential rates of LTT will increase by 1% across all bands on 22 December 2020. This applies to sales of second homes and buy-to-let properties as opposed to the main residential home.
In most cases where contracts have already been exchanged, but not completed you will be able to use the previous higher rates.
Changes for non-residential property
On 22 December 2020, the zero-rate band of the tax charged for lease premiums and assignments, and freehold property transfers will increase from £150,000 to £225,000.
The zero-rate band of the tax charged on the rent element of non-residential leases will increase from £150,000 to £225,000.
The Welsh Government has also announced that it plans to increase the 'relevant rent' amount for the annual rent element of non-residential rents from £9,000 to £13,500 in February 2021.
End of temporary reduction period
The temporary increase to the nil rate band of LTT for residential property transactions will end on 31 March 2021. This means on 1 April 2021, these rates will revert to the original rates and starting threshold of £180,000. Purchases must be completed before this date to use the temporary reduction rates.