In its draft Budget, the Welsh Government has announced, from 22 December 2020, a 1% increase to the higher rates of Land Transaction Tax (LTT) along with changes to the non-residential tax bands.

Higher residential tax rates

The higher residential LTT rates generally apply to purchases of properties which are not bought to be the main residence of the buyer but, for example, to provide a second home, be used as part of a holiday letting business or for a longer-term letting.

  • Transactions with an effective date on or after 22 December 2020 will be subject an additional 1% LTT, taking the higher-rate addition from 3% to 4%.
  • The old rates continue to apply where the effective date is after 21 December 2020 but contracts were exchanged before that date.

Non-residential property rates

  • The 0% band is extended from £150,000 to £225,000. This applies to transactions with an effective date on or after 22 December 2020.
  • This 0% band extension also applies to rented properties.

It was also announced that changes would be made to the amount of ‘relevant rent’ that applies to non-residential lease acquisition transactions to reflect the increases to the thresholds. The relevant rent amount will increase from £9,000 to £13,500 in early February 2021.

Useful guides on this topic 

Welsh Land Transaction Tax
What is Land Transaction Tax? How does it operate? What reliefs are available?

External links

Written Statement: Welsh Devolved Taxes and Welsh Rates of Income Tax - Draft Budget 2021-22

Land Transaction Tax rates and bands

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