Stamp Duty changes in Wales explained

As of April 1, house buyers in Wales will pay Land Transaction Tax (LTT) instead of Stamp Duty.

Here’s a look at how LTT works, who it affects and how it’s different to Stamp Duty.

Stamp Duty vs. LTT

Stamp Duty is a tax you pay when you buy a property or a piece of land worth £125,000 or more. If you’re a first time buyer, you won’t pay Stamp Duty on properties worth £500,000 or less.

It’s a banded tax, which means the more the property/land is worth, the more you’ll pay in Stamp Duty.

You pay:

  • Nothing on the first £125,000 of the purchase price
  • 2% on anything between £125,000 and £250,000
  • 5% between £250,001 and £925,000
  • 10% between £925,001 and £1.5million
  • 12% on anything above £1.5million
  • So, if you bought a house worth £275,000, you’d pay nothing on the first £125,000, £2,500 (2%) on the next £125,000 and finally, £1,250 (5%) on the remaining £25,000 – for a total of £3,750.

Changes in Wales

In England and Northern Ireland, that’s still the case. But in Wales, Stamp Duty is being replaced by Land Transaction Tax, which works a little differently.

You’ll pay LTT if you buy a property or land in Wales worth at least £180,000.

You’ll be charged:

3.5% LTT on anything over £180,000 and up to £250,000 5% on anything above £250,000 and up to £400,000 7.5% on anything above £400,000 and up to £750,000 10% above £700,000 and up to £1.5million 12% above £1.5million So, if you buy a property worth £275,000 in Wales, you’d pay no LTT on the first £180,000, £2,450 (3.5%) on the next £70,000 and then £1,250 (5%) on the remaining £25,000 – for a total of £3,700.

It’s only a slight difference because it was designed to mirror the way Stamp Duty works, while making sure home buyers in Wales get a fair deal on tax when they buy a property.

With the average house price in Wales currently £153,034*, the idea is that the average buyer won’t have to pay anything. This means that buyers who’d previously been liable for Stamp Duty could find themselves at least £560 better off under LTT.

However, there’s no LTT exemption for first time buyers so, depending on the value of the property, you could be worse off under LTT than Stamp Duty if you’re buying for the first time – but only if you’re spending upwards of £180,00.

Chunk of change

Stamp Duty and LTT can be significant chunk of change, so whether you’re a first time buyer or not, you should check whether you’re liable to pay and factor in the costs to your savings.

At Mojo Mortgages we can help. Our calculator takes fees into account for a more meaningful comparison of mortgages.

Also, we don’t charge a fee, so if you’re thinking of enlisting a broker who does, try us instead and the cash you save could go towards your Stamp Duty or LTT.

*Land Registry UK House Price Index at time of publishing

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