No land tax in Wales on homes below £180,000
NOBODY buying a home in Wales for less than £180,000 will have to pay the new Land Transaction Tax, the Welsh Government has announced.
The new tax will come into force in April and will replace stamp duty.
The Welsh Government says the new threshold is “£55,000 higher than the starting threshold for stamp duty land tax in England”. It expects the move will reduce the tax burden for around 24,000 Welsh homebuyers.
According to property website Zoopla, the average house price in Wales is £185,401 this month, a fall of 0.24% since September 2017.
Right now, the same rules concerning stamp duty apply in Wales as in England. The threshold for residential property starts at £125,000 but, as a result of the Chancellor’s Budget announcement last month, it rose for firsttime buyers to £300,000.
Conservatives have warned that the new Welsh system represents a “big cut in support available for first-time buyers in this country” and are concerned it could fuel a “brain drain”, with talented people choosing to set up home in England.
However, the Welsh Government states that under its plans “around 80% of first-time buyers in Wales will pay no tax – the same proportion which will benefit from the Chancellor’s first-time buyer stamp duty land tax relief in England”.
It claims that the “average home buyer in Wales will pay more than £500 less tax than under stamp duty land tax”.
Finance Secretary Mark Drakeford said: “Under the changes to the main rates of land transaction tax, which I am announcing today, around 65% of these house sales will not be liable for tax. The changes will benefit more buyers than the Chancellor’s targeted relief for first-time buyers – more than half of buyers will benefit from a reduction in tax relative to stamp duty land tax.
“This is consistent with my aim to make tax fairer and contribute to a more equal Wales. These improved rates will help meet Wales’ needs and priorities and will make a real difference to people’s lives.”
The Welsh Government had planned to have a starting threshold of £150,000 but has decided to increase it to £180,000 following the “UK Government’s introduction of a stamp duty land tax relief for first-time buyers in the Autumn Budget”.
It said the Finance Secretary had “given careful consideration to the right approach for both the Welsh property market and for Welsh home buyers” and that the aim was “to help everyone looking to buy a home in this part of the market by increasing the progressivity of the tax overall”.
Welsh Conservatives were unimpressed by his announcement.
A spokesman said: “The Welsh Government had no other option to change the threshold following the Chancellor’s hugely positive announcement for first-time buyers in last month’s Budget.
“However, when this new tax rate in Wales kicks in next April it will represent a big cut in support available for first-time buyers in this country, with greater financial assistance provided across the border in England. This is clearly concerning and we’ll be playing close attention to the impact this might have on Wales’ ‘brain-drain’ problem, where our most talented are no longer staying this side of the Severn Bridge... Labour are playing catch-up and [are] on course to miss yet another government commitment as the housing crisis across Wales deepens.”