Purchasing in Wales - Stamp Duty/LTT

SDLT_Geek · 28 January 2018 at 6:21PM

This link: http://senedd.assembly.wales/ieIssueDetails.aspx?IId=20885&Opt=3 explains that on 30/01/2018 it is to be proposed that the National Assembly for Wales approves the draft Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018 in accordance with the draft laid in the Table Office on 8 January 2018.

The draft regulations laid on 8 January 2018 can be found here: http://www.assembly.wales/laid documents/sub-ld11347/sub-ld11347-e.pdf and an explanatory note here: http://www.assembly.wales/laid documents/cr-ld11378/cr-ld11378-e.pdf

I have had a look at the draft regulations, it is regulations 3 and 4 which deal with contracts for Welsh properties entered into before the commencement date of 1 April 2018.

Regulation 3: For contracts entered into on or before 17 December 2014, SDLT can still apply even for completions from 1 April 2018. But there is a carve out for events like contract variations or changes of buyer. If any of those carve outs apply then LTT will be due, not SDLT, for completions from 1 April 2018.

Regulation 4: For contracts entered into after 17 December 2014 but before 1 April 2018, generally LTT is due if completion is on or after 1 April 2018. But if there has been early "substantial performance" so SDLT has already been paid, then a credit is given against the LTT due for the amount of SDLT paid. For example if contracts were exchanged in 2017 and the buyer took possession then but only completed in May 2018, then SDLT would have been due to HMRC in 2017. On completion in May 2018 the buyer has to work out what the LTT would have been and pay to WRA any excess of LTT over SDLT paid for that transaction.

SDLT_Geek · 30 January 2018 at 11:01PM

It looks as if the regulations were passed today: http://www.senedd.assembly.wales/ieListDocuments.aspx?CId=401&MId=4901

6.
The Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018

View the background to item 6.

NDM6637 Julie James (Swansea West)
To propose that the National Assembly for Wales, in accordance with Standing Order 27.5:
1. Approves that the draft Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018 are made in accordance with the draft laid in the Table Office on 8 January 2018.
Supporting Documents
Explanatory Memorandum
Finance Committee Report
Constitutional and Legislative Affairs Committee Report
Minutes:

The item started at 17.27
Voting on the motion under this item was deferred until Voting Time.
NDM6637 Julie James (Swansea West)
To propose that the National Assembly for Wales, in accordance with Standing Order 27.5:
1. Approves that the draft Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018 are made in accordance with the draft laid in the Table Office on 8 January 2018.
The result was as follows:

For 50
Abstain 3
Against 0
Total 53

The motion was agreed.

biged670 · 2 February 2018 at 4:21PM

Thanks for taking the time to provide the update... So in summary, LTT will still be due even if contracts are exchanged before 01/04/2018?

SDLT_Geek · 2 February 2018 at 4:59PM

Yes, if a purchase in Wales completes on or after 1 April 2018 Land Transaction Tax will be the relevant tax to consider, unless contracts were exchanged on or before 17.12.2014 (when it could be SDLT or LTT depending on what happened since 17.12.2014).

biged670 · 2 February 2018 at 5:00PM

Thanks for clarifying, very disappointing news.

SDLT_Geek · 18 March 2018 at 12:17PM

On Friday 16 March 2018 HMRC published new guidance: "SDLT to Land Transaction Tax: transitional guidance" https://www.gov.uk/government/publications/sdlt-to-land-transaction-tax-transitional-guidance

Section 15 of that guidance addresses relief for first time buyers. It confirms that if completion of a purchase in Wales is on or after 1 April 2018 there is no first time buyers' relief for Welsh transactions.

The guidance does not mention the possibility of contracts having been exchanged on or before 17 December 2014 but that must be very rare. Perhaps a few new builds will be affected, but so few that it was not thought worth mentioning it in the Revenue guidance?

TamsinC · 18 March 2018 at 3:14PM

So glad this post come into my radar today - I had no idea about this and we are buying a house in Wales - we are very close to completing - I have written an email to my solicitor asking her to push it through quickly (there is no need to hold it up that I can see). Hopefully, it will go through.

SDLT_Geek · 18 March 2018 at 3:21PM

TamsinC, have you worked out whether you pay less under:

(a) SDLT or
(b) LTT?

You would pay less under SDLT for example if you qualify for first time buyers' relief (not available in Wales under land transaction tax).

But for lower value transactions, regular land transaction tax can be less than land transaction tax. There are on line calculators you can use.

TamsinC · 18 March 2018 at 3:31PM

I did an online calculator on the Welsh government site - I would pay more it seems under WLTT.

SDLT_Geek · 18 March 2018 at 4:25PM

So it sounds as if you are right to say it would save you money to complete before 1 April 2018 and pay stamp duty land tax rather than to complete later and pay the Welsh land transaction tax.

It would not keep you within the SDLT regime for you to exchange contracts before 1 April 2018 if you complete after LTT is in force.

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Purchasing in Wales - Stamp Duty/LTT

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