Land Transaction Tax Threshold In Wales Increases
Those buying a house in Wales worth up to £225,000 will not have to pay any tax the Welsh Government announced yesterday following the UK’s mini budget last Friday.
The Stamp Duty changes announced in the mini budget triggered extra Welsh funding of £70m last week.
The threshold on Land Transaction Tax (the Welsh version of Stamp Duty) will be raised. This will take the majority of houses sold (61% according to our Finance Minister) out of the tax bracket in Wales, which could help lower income and first time house buyers. Average house prices in Wales were recorded in July as £240,635.
Bottom line, there will be a ‘small increase’ in the rate of Land Transaction Tax for homes that cost more than £345,000.
The new rate comes into effect from 10 October 2022 and follows changes in Stamp Duty thresholds which rose from £125,000 to £250,000. (Unlike England, Wales has no special thresholds for first-time buyers). The table below shows Land Transaction Tax in Wales (from 10 October 2022).
Land Transaction Tax in Wales
| Portion of property cost | Tax Rate |
| up to £225,000 | 0% |
| between £225,000 to £400,000 | 6% |
| between £400,000 and £750,000 | 7.50% |
| between £750,000 and £1,500,000 | 10% |
| more than £1,500,000 | 12% |
*Rates for second-home buyers remain unchanged. Source: Welsh Government, 27 September 2022
Under new rates, house buyers will be 6% tax between £225,000 and £400,000. Previously the rate was 3.5% between £180,000 and £250,000 and 5% between £250,000 and £400,000.
Despite the rise in the rate, Welsh Government says change in threshold means anyone buying a house for less than £345,000 will see a reduction in the tax they pay, up to a maximum of £1,575.
People buying homes worth more than £345,000 will see an increase of up to £550. These people represent about 15% of property transactions in Wales.
Land Transaction Tax is paid on a portion of the house purchase that falls within the bands rather than entire cost. Other rates remain unchanged. Between £400,000 and £750,000 the rate is 7.5% while between £750,000 and £1,500,000 is 10%. Purchases over £1,500,000 will incur 12%.
As a side note, there are currently considerations underway about Welsh rates of income tax, with some suggestions from Plaid Cymru to leave at 20% rather than reduce to 19%. They say this would bring £200m extra to the Welsh Government which could be used directly to help ease pressure of the cost of living and protect public services.
Further information at Wales Gov exists.
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