Rishi Sunak recently announced his plans for a stamp duty “holiday” to help rebuild the nation’s economy after lockdown, as a temporary measure intended to stimulate the housing market, in parallel with this the Welsh Government has announced a break on the tax paid on house sales for homes worth less than £250,000 until March 31, 2021 (this change in the rules will not apply to second homes or buy to let properties). Wales refers to the land tax not as Stamp Duty, but as Land Transaction Tax (LTT).
The announcement is a move to not only boost the property market but the wider economy through driving demand for renovations, bathrooms, kitchens and other furnishings.
This threshold of £250,000 is significantly lower threshold compared to what was announced in England when the Chancellor removed Stamp Duty for all homes under £500,000. But as house values in Wales are lower than in England, the Welsh public purse would have been hit harder by a similar holiday here, as a higher proportion of property sales fall under the £500k threshold.
As the tax break will not apply to the purchase of additional properties such as buy to lets or second homes, it is hoped that this decision will help those most in need, such as those moving up the housing ladder and first-time buyers. The LTT is tiered, meaning you pay the appropriate rate of tax for different portions of the house price. So even people purchasing homes over £250,000 will benefit by £2450.
The measures will come in on July the 27 to correspond with the full reopening of the housing market in Wales.
So what does the Land Transaction Tax break mean for Wales?
|Portion of Purchase Price||Usual rate||Temporary rate|
|Up to £180,000||0%||0%|
|£180,000 to £250,000||3.5%||0%|
|£250,000 to £400,000||5%||5%|
|£400,000 to £750,000||7.5%||7.5%|
|£750,000 to £1.5m||10%||10%|
Second homes and Buy to Let properties are subject to an additional 3% LTT on top of the current rate.
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