Homebuyers in Wales will pay no tax on houses worth up to for £180,000 as part of a new Welsh ‘stamp duty’ being next year.
The starting threshold for land transaction tax will increase from its original figure of £150,000 to £180,000 for the residential main rates when the tax is devolved in April 2018.
The new threshold is £55,000 higher than the starting threshold for stamp duty land tax in England and, according to the Welsh Government, will reduce the tax burden for around 24,000 homebuyers – including first-time buyers – in Wales.
Finance Secretary Mark Drakeford’s decision to change the starting threshold for land transaction tax follows the UK Government’s introduction of a stamp duty land tax relief for first-time buyers last month. This will still apply in Wales until April next year.
The Welsh Government also said around 80% of first-time buyers in Wales will pay no tax – the same proportion which will benefit from the Chancellor’s first-time buyer stamp duty land tax relief in England.
Professor Drakeford said: “Under the changes to the main rates of land transaction tax, which I am announcing today, around 65% of these house sales will not be liable for tax.
“The changes will benefit more buyers than the Chancellor’s targeted relief for first-time buyers – more than half of buyers will benefit from a reduction in tax relative to stamp duty land tax.
“This is consistent with my aim to make tax fairer and contribute to a more equal Wales. These improved rates will help meet Wales’ needs and priorities and will make a real difference to people’s lives.”
The residential main rates for land transaction tax are:
£0-£180k 0%
£180k-£250k 3.5%
£250k-£400k 5%
£400k-£750k 7.5%
£750k-£1.5m 10%
£1.5m-plus 12%