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Changes to the rates and bands of Land Transaction Tax
Date Posted: 22 December 2020Changes to the rates and bands of Land Transaction Tax
On 21 December 2020, the Welsh Government announced changes to the higher residential rates, and non-residential rates and bands, of Land Transaction Tax (LTT). The temporary increase to the nil rate band of LTT for residential property transactions will end on 31 March 2021. Following the Chancellor's budget announcement yesterday, the Welsh Finance Minister has confirmed that the Land Transaction Tax temporary reduction period will be extended by a further three months so that it will end on 30 June 2021
Changes for higher rates residential property
The higher residential rates of LTT will increase by 1% across all bands on 30 June 2021.
If you complete on buying a property:
- before22 December you pay the previous rates of tax
- on or after22 December you pay the new rates of tax
In most cases where you have already exchanged contracts, but not completed you will be able to use the previous higher rates.
Changes for non-residential property
On 22 December 2020:
- the zero-rate band of the tax charged for lease premiums and assignments, and freehold property transfers will increase from £150,000 to £225,000
- the zero-rate band of the tax charged on the rent element of non-residential leases will increase from £150,000 to £225,000
The Welsh Government have also announced that they intend to increase the 'relevant rent' amount for the annual rent element of non-residential rents from £9,000 to £13,500 in February 2021.
End of temporary reduction period
The Welsh Government have confirmed that the temporary increase to the nil rate band of LTT for residential property transactions will end on 30 June 2021. This means on 1 July 2021, these rates will revert to the original rates and starting threshold of £180,000. You must complete your purchase before this date to use the temporary reduction rates.
* Information obtained from the Welsh Government website.
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