People buying property in Wales under £250,000 will not have to pay Land Transaction Tax (LTT) as of July 27.
Usually properties under £180,000 are exempt from paying tax and a rate of 3.5 per cent is incurred for purchases between £180,000 to £250,000.
However, the Welsh Government announced yesterday a temporary increase to the nil rate band of LTT for residential property transactions in Wales to include the £180,000 to £250,000 bracket, which will come into effect on July 27 and last until March 31, 2021.
|Portion of price
|Up to £180,000
|£180,000 to £250,000
|£250,000 to £400,000
|£400,000 to £750,000
|£750,000 to £1.5m
Welsh Government Finance Minister, Rebecca Evans, said the change to the tax threshold would not apply to people buying a second property such as a buy to let.
She said: “Our starting residential tax threshold was already higher than any other UK nation. It is the only starting rate that is set above average houses prices.
“Last Wednesday the UK chancellor announced temporary changes to the Stamp Duty Land Tax which only applied to England and Northern Ireland. That Stamp Duty Land Tax holiday up to £500,000 applies to all residential purchases.
“Our goal has been to ensure the fairest balance between lifting the threshold to help economical growth whilst also seeking to provide funding for the urgent pressures facing so many people during this crisis.
“This is a tax holiday that will last until March 31 of 2021. Unlike England this new threshold will not apply to purchase of additional properties such as buy to let or second homes.
“It will support people looking to purchase their first home or looking to move up on the housing ladder.
“So it will offer more targeted help to those who may be effected by the economic challenges resulting from the pandemic.
“The new threshold will mean no tax will be paid on around 80 per cent of transactions in Wales with the main residential rate applied.
“So we’re taking a different approach here in Wales and as a result the decision will not only provide support to home buyers, it also frees up some £30 million to invest in a different even more direct stimulus of the housing industry.”
This now means there are holidays on property sales taxes in each part of the UK.
The chancellor announced a stamp duty holiday for England and Northern Ireland in his Summer Statement on July 8, which came into immediate effect.
While Scotland announced plans for a similar scheme the next day.
If you would like to find out how much tax you will have to pay – there is a tax calculator available on the Welsh Government’s website. Simply click here to access.
The Welsh Government said they are updating the tax calculator and other online services “as a priority” following the announcement yesterday, so the new amendments will be available soon.