Wales will planning to replace stamp duty with its own land transaction tax, the first Welsh tax to be introduced in almost 800 years.
The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Bill is the first bill to be introduced as part of the devolved Welsh government’s new Legislative Programme. Following in the footsteps of Scotland, the new tax will replace stamp duty and be payable on the purchase or lease of a building or land in Wales.
In 2014-15, £170m was raised from stamp duty land tax in Wales, with 55,000 transactions taking place. This is expected to rise to £244m by 2018-19. The new tax will come into effect in April 2018.
Like stamp duty, the levy will apply to transactions above a certain threshold, although the bill will allow the government to set out bands in several years, taking into account the economy and housing market at the time.
“This is an historic milestone in the devolution of tax powers to Wales. This Bill marks another step towards the creation of taxes which are more suited to the needs of Wales and support Welsh public services,” said Finance Secretary Mark Drakeford.
“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.”
“We have consulted widely about how this tax should work for Wales and listened to a range of views. This is why it will broadly mirror stamp duty land tax, providing the consistency and stability business tell us they need and providing a smooth transaction for home buyers and the property market. We have also been able to learn from the devolution of the tax to Scotland.”
The news follows the introduction of a stamp duty surcharge upon additional residential property purchases – i.e. second homes and buy-to-let investments – in April 2016. Wales says this 3 per cent hike is “under consideration” as part of the LTT legislation being introduced in 2016.
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