The Welsh government is consulting on the structure and rates for a new land transaction tax to replace stamp duty in Wales, the first new tax to be levied in Wales for 800 years, following the recommendations of the Silk Commission for greater devolved powers
The Land Transaction Tax (LTT) will replace stamp duty land tax (SDLT) in April 2018 in Wales. Recent HMRC estimates for 2013-14 show Welsh revenues of £145m for SDLT, with 51,600 transactions taking place. The Office for Budgetary Responsibility forecasts that, in 2018-19 when the tax is devolved, the SDLT revenues could be £231m in Wales.
Jane Hutt, Welsh finance and government business minister, said: ‘One of the key reforms we were considering was the removal of the so-called ‘slab approach to residential stamp duty land tax, something which has recently been reformed by the UK government. While we are not looking for change for change’s sake, I am keen to explore other ways in which we can improve the current system, making it more effective, more efficient, and better suited to the priorities and needs of Wales.’
The consultation seeks views on 28 specific questions in relation to tax structure, bands and rates for residential and non-residential transactions; partnerships, trusts and companies; leases; reliefs and exemptions; and compliance and avoidance. It also raises questions such as what should be done about sales of land which crosses borders and so could be liable for both LTT and SDLT.
Hutt said: ‘The introduction of Scotland’s Land and Buildings Transaction Tax shows us that a tax can be developed in the spirit of the tax it is replacing but still have very different characteristics.’
The consultation paper points out the starting threshold for LTT could be lower than SDLT as the average house price in Wales (£162,000) is lower than both the UK (£242,000) and Scotland averages (£181,000). Wales also has relatively fewer high price residential property transactions, with just 1% of SDLT residential transactions in 2012/13 priced at £500,000 or more.
The document does not set out the property bands or the rates that might be applied, with Hutt saying these needed to be revealed much closer to implementation in order to stop them becoming outdated and unsuitable.
The Welsh Assembly has already held a consultation on the design of a new taxa authority, which has shown strong backing for the creation of a Welsh Revenue Authority and a taxpayers’ charter.
The consultation on LTT closes on May 6. Details are here http://wales.gov.uk/docs/caecd/consultation/150210-land-transaction-tax-en.pdf
