Tax is changing in Wales next year

From next April, Wales will join Scotland in becoming responsible for some of the taxes paid locally. This will begin with the introduction of the new Welsh land transaction tax (LTT) which will replace the UK stamp duty land tax (SDLT) as well as the new landfill disposals tax (LDT) which will replace landfill tax. These changes will mark the first time that the Welsh have taken control of their own taxes for more than 800 years.

Under the new rates for LTT, Wales will have the highest starting threshold for the property tax in the UK. All buyers of residential properties in Wales costing up to £400,000 will pay the same or less tax than under SDLT. However, Welsh property purchases above £400,000 will face a 7.5% LTT, increasing to 10% at £750,000 and to 12% for purchases over £1.5m. HMRC will not accept SDLT returns for land transactions in Wales with an effective date of transaction on or after 1 April 2018.

It remains to be seen if the Welsh Assembly will introduce similar reliefs for first-time buyers to the SDLT changes announced in the recent Budget. These changes concerned the abolition of SDLT for all first-time buyers making a purchase of up to £300,000 with some SDLT relief available for those spending up to £500,000.

As for the LDT, the Welsh government has previously confirmed that the landfill disposals tax (LDT) rates will mirror the landfill tax rates in 2018-19 and 2019-20 to provide certainty and stability for businesses and reduce the risk of waste moving across the Wales-England border.

Planning note

A year after the introduction of the LTT and LDT, the Welsh rates of income tax (WRIT) will be introduced in April 2019. Similarly, to the Scottish arrangements revenue from the WRIT will go to the Welsh government.

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