Land transaction tax

As a solicitor, you must file a return and pay the tax on your client’s behalf within 30 days from the day after the effective date of transaction if the property or land is over a certain value.

LTT replaced stamp duty land tax (SDLT) in Wales from April 2018. SDLT still applies in England and Northern Ireland.

Some of the differences between LTT and SDLT are:

• the relief for first-time buyers is not available in Wales
• the 0% band currently applies to purchases up to £225,000
• the filing and payment deadlines are 14 days for SDLT and 30 days for LTT

The Welsh government has provided guidance on the differences between LTT and SDLT.

How much is paid

You can work out the amount of tax that your client must pay using the Welsh government’s land transaction tax calculator.

What is included

The buyer pays LTT on the ‘chargeable consideration’. Usually this is the price they pay for the property or land, including any fixtures and fittings.

If the sale price includes extra items such as furniture or carpets, or plant and machinery that can be easily removed, the buyer and seller must agree a fair price. This can be deducted from the sale price to get the chargeable consideration.

Read the Welsh government’s guidance on the chargeable consideration

Thresholds and rates

Residential property

The threshold for residential property is £225,000. If the price of the property is equal to or less than the threshold, then the buyer does not pay any LTT.

The current rates apply to transactions with an effective date on or after 10 October 2022.

Non-residential property

The threshold for non-residential property, such as commercial property, is £225,000.

The current rates apply to transactions with an effective date on or after 22 December 2020.

Reliefs

Reliefs are available for certain types of transaction. These are explained in the Welsh government’s guidance on reliefs.

Higher rate for additional dwellings

A higher rate is charged for an ‘additional dwelling’ if it is worth £40,000 or more.

This applies to purchases such as buy-to-let properties or holiday homes if the purchase means the buyer will own more than one property.

Use the Welsh government's tool to check whether a transaction is subject to the higher rate of LTT.

Read the Welsh government’s technical guidance on higher rates

Filing LTT returns

You must file a return even if the buyer does not need to pay any tax, unless the transaction is exempt.

Exemptions

A transaction is exempt from LTT and you do not have to file a return if:

• no payment changes hands
• the property is left in a will
• the property is transferred because of a divorce
• the property is freehold and worth less than £40,000
• the property is leasehold and worth less than £40,000 and the annual rent is less than £1,000 and the lease is seven years or more
• the property is leasehold and worth less than the LTT zero rate threshold and the lease is less than seven years

Read the Welsh government’s guidance on notifiable transactions

Deadlines

You must file the return and pay the tax within 30 days from the day after the ‘effective date’ of the transaction.

This is usually the completion date, but it can be the date when the transfer is ‘substantially performed’ if this happens before completion – for example, if the buyer is given possession of the property early.

Online returns

If you’re a solicitor, you will need to register to use the Welsh Revenue Authority’s online services.

You can then submit LTT returns online. As soon as your return is submitted, a unique transaction reference number (UTRN) will be produced in your online account.

Sign up for and access an online account

Guidance on LTT online returns

Paper returns

If you’re not a solicitor or conveyancer, you cannot file a return online and you’ll need to send a paper return to the Welsh Revenue Authority (WRA).

Access paper return forms

Paying the tax

The deadline for paying the tax is the same as the deadline for filing the return: 30 days from the day after the effective date of the transaction.

You’ll need to file the return first to get the UTRN.

The tax should be paid to the Welsh Revenue Authority and not to HMRC.

When paying, it is important to use the correct UTRN and the correct WRA bank account. This will allow the WRA to link the payment to the LTT return.

There are several ways to pay. Some methods take longer than others and you’ll need to allow enough time for the payment to go through before the deadline.

Payment methods include:

• Faster Payments
• CHAPS
• BACS
• by cheque through the post

Payment must be made to:

• sort code: 60 70 80
• account number: 10028838
• account name: Welsh Revenue Authority Tax

Read the Welsh government’s guidance on how to pay LTT

Penalties and interest

There are penalties for late filing and late payment.

If a tax return is late you will have to pay a penalty of £100. If the return is more than six months late you will have to pay a penalty of the greater of:

• 5% of the amount owed
• £300

There is a further penalty if the return is over 12 months late.

Read the Welsh Government’s guidance on tax penalties

Anti-avoidance

Solicitors should not become involved in or advise clients to use schemes that are structured to avoid or reduce LTT.

The Solicitors Regulation Authority has warned that it will look at the conduct of any firm that is actively involved in such schemes. They are also likely to be challenged by HMRC or the WRA.

A General Anti-Avoidance Rule (GAAR) applies to Welsh devolved taxes including LTT, under the Tax Collection and Management (Wales) Act 2016.

It allows the WRA to tackle artificial arrangements that create a tax advantage, and is intended to deter taxpayers from using such arrangements.

The UK General Anti-Abuse Rule does not apply to Welsh devolved taxes. The Welsh GAAR and the UK General Anti-Abuse Rule are different, as explained in WRA guidance.

Read our practice note on disclosure of tax avoidance schemes

Read the WRA’s guidance on GAAR