Land Transaction Tax - everything you need to know

If you’re buying a home in Wales you will now pay a reduced rate of Land Transaction Tax (LTT) until 31 March 2021. If you’re buying your main home, you will pay no LTT on purchases under £250,000. If you’re buying an additional property, you will need to pay the higher residential rates for each band.

What is Land Transaction Tax?

Use our Land Transaction Tax calculator to find out how much you’ll pay.

Land Transaction Tax (LTT) is a tax you might have to pay if you buy a residential property or piece of land in Wales.

If you’re buying your main property up until 31 March 2021, you will pay no LTT on properties costing up to £250,000. This will apply if you’re a first-time buyer and if you’ve owned a property before.

Properties costing more than £250,000 will pay LTT based on the value of the property.

If you’re buying a second home, you’ll pay the higher residential rates of LTT on properties costing more than £40,000.

This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.

If you’re buying in Scotland, find out more about Land and Buildings Transaction Tax.
If you’re buying in England or Northern Ireland, find out more about Stamp Duty.

How much is Land Transaction Tax?

There are several rate bands for Land Transaction Tax (LTT).

The tax is calculated on the part of the property purchase price falling within each band.

For example, if you buy a house for £300,000, the LTT you owe is calculated as follows:

0% on the first £250,000 = £0

5% on the next £50,000 = £2,500

Total LTT = £2,500

Land Transaction Tax (LTT) rates

Minimum property purchase price Maximum property purchase price Stamp Duty rate (only applies to the part of the property price falling within each band)
£0 £250,000 0%
£250,001 £400,000 5%
£400,001 £750,000 7.5%
£750,001 £1,500,000 10%
Over £1,500,000   12%

Land Transaction Tax on second homes

Buyers of additional residential properties, such as second homes and buy-to-let properties, will have to pay the higher residential rates of Land Transaction Tax (LTT) on properties costing more than £40,000.

Minimum property purchase price Maximum property purchase price Stamp Duty rate (only applies to the part of the property price falling within each band)
£0 £180,000 3%
£180,001 £250,000 6.5%
£250,001 £400,000 8%
£400,001 £750,000 10.5%
£750,001 £1,500,000 13%
Over £1,500,000   15%

When do you have to pay Land Transaction Tax?

You’ll need to submit a Land Transaction Tax (LTT) return and pay what you owe to the Welsh Revenue Authority.

If you don’t submit a return and pay the tax, Welsh Revenue Authority might charge you penalties and interest.

When is Land Transaction Tax not payable?

There are other circumstances in which LTT is either not payable or can be reduced:

Slightly over rate band: If the price is only just within a higher band, ask the seller or estate agent if they would accept a slightly lower price.

Transfer of property in separation or divorce: If you’re divorcing or separating from your spouse or partner as part of an agreement or court order, there’s no LTT to pay if you transfer a proportion of your home’s value to them. If joint owners are unmarried and not in a civil partnership when they transfer an interest in land or property from one joint owner to another then you may have to pay SDLT.

Transfer of deeds: If you get land or property under the terms of a will, there’s no need to tell Welsh Revenue Authority and you won’t pay Land Transaction Tax. This applies even if you take on an outstanding mortgage on the property on the date the person died. This is on condition that no other consideration is given.

If you get property as a gift you won’t pay Land Transaction Tax as long as there’s no outstanding mortgage on it. But if you take over some or all of an existing mortgage, you’ll pay Land Transaction Tax if the value of the mortgage is over the Land Transaction Tax.

However, if you exchange properties with another person, you will each have to pay LTT on the property you receive based on its market value.

How to pay Land Transaction Tax

Usually your solicitor will deal with the Land and Transaction Tax (LTT) return, although you can do it yourself.

Either way, you’re responsible for making sure it’s all submitted on time.

If the price of your new home is under £180,000, you must still submit a return (unless exempt) even though you won’t need to pay any LTT.

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