If you’re buying a home in Wales costing more than £180,000, you’ll have to pay Land Transaction Tax (LTT) on your purchase. Use this guide to find out about how LTT works, how much you’ll pay, LTT on second homes and how it is paid.
What is Land Transaction Tax?
In Wales, you’re liable to pay Land Transaction Tax (LTT) when you buy a residential property, or piece of land costing more than £180,000 (or more than £40,000 for second homes).
This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.
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 £260,000, the LTT you owe is calculated as follows:
0% on the first £180,000 = £0
3.5% on the next £70,000 = £2,450
5% on the remaining £10,000 = £500
Total LTT = £2,950
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)
Land Transaction Tax on second homes
Buyers of additional residential properties, such as second homes and buy-to-let properties, will have to pay an extra 3% in Land Transaction Tax (LTT) on top of current rates for each band on properties costing more than £40,000.
Land Transaction Tax for first-time buyers
There is no relief from Land Transaction Tax (LTT) for first-time buyers in Wales.
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?
You may avoid Land Transaction Tax (LTT) if you buy a property as your main residence for less than £180,000.
But for many homebuyers this just isn’t possible.
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 Buildings Transaction Tax (LBTT) 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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