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Tax when purchasing a property
Land Transaction Tax [LTT] will replace UK Stamp Duty Land Tax [SDLT] in Wales and pave the way for Wales to raise its own taxes for the first time in nearly 800 years Scotland already has the Land and Buildings Transaction Tax [LBTT] instead of Stamp Duty but now Wales is following suit with LTT coming into effect from April 2018.
The Welsh Government in the process of setting up the Welsh Revenue Authority a new public body that will collect and manage the devolved taxes from April 2018. The is broadly consistent with SDLT preserving the underlying structure and mirroring key elements such as partnerships trusts and reliefs to provide stability and reassurance to businesses and the property market. Over the next three years the welsh Revenue Authority expects to collect more than £billion In tax revenues.
The Welsh Government s proposed rates and bands will be announced by October 2017. NAEA Propertymark outlined to the Welsh Government during an evidence session of the Welsh Assembly s Finance Committee thot the Welsh Government should consider making the tax bands and rates more suited to the value of property In Wales In comparison to England and Scotland By doing this the Welsh Government can take Into consideration the uniqueness of the Welsh property market in order to better meet the housing needs of the population and maximise tax revenue
In December 20114 the UK Government announced that SDLT would be charged on residential property on a slice basis This means that rates would only apply to the part of a property s selling price that fell within each value band As a result SDLT Is payable on Increasing portions of the property price above £145,000 when buying residential property.
Land and Buildings Transaction Tax (LBTT), replaced Stamp Duty in Scotland from 1 April 2015 as part of the reforms introduced under the Scotland Act 2012. Land and Buildings Transaction Tax is based upon a scale of charges levied on all residential transactions over £145,000.
In June, the Scottish Finance Secretary, said he will consider changes to Scotland’s property purchasing tax amid falling revenues and growing criticism. LBTT was Scotland s first domestic tax In more than 300 years, but experts have blamed LBTT for the sharp fall in mid-markets sales and the Scottish Government has admitted that the tax ls expected to raise almost £800 million less than originally forecast during this Parliament.
Currently in Scotland LBTT ls not paid on properties that cost less than £145,000 or on the first £145,000 of the price. Higher-priced properties are then taxed by bond 2 per cent on the next £105,000 (£145,000 to £250,000) 5 per cent on me next £75,000 (£250,000 to £325 000) 10 per cent on the next £425 000 (£320,000 to £750,000) and 12 per cent on anything above £750,000.
Property Professional Magazine Issue 25 - November/December 2017