Welsh LTT consultations

Proposals to amend the refund and exception rules 

Higher residential rates of Land Transaction Tax (LTT) are charged on the purchase of a dwelling, where the purchaser already owns an interest in another dwelling. Refunds and exceptions can apply for up to three years from the date of the new purchase.

The consultation now published seeks views on proposed new rules which will extend this three-year period in cases where the transaction has been impeded by fire safety defects or prevented by emergency restrictions. 

In 'Purchase Before Sale' (PBS) scenarios, it is proposed that the three-year period to claim refunds or exceptions will be extended: 

• So that taxpayers may claim a refund on all qualifying transactions taking place from 1 April 2018, where the sale of a former main residence was impeded due to issues relating to fire safety defects. 
• For all transactions taking place once the new rules come into force, where the sale of a former main residence was prevented by emergency restrictions.
  • This second change will not apply to transactions affected by restrictions imposed before the rules come into force, such as during the COVID pandemic.

In 'Sale Before Purchase' (SBP) scenarios, it is proposed that: 

• The three-year period will be extended for all transactions taking place once the new rules come into force where the purchase of a new main residence is prevented by emergency restrictions.

The new rules will not provide an extension to the three-year exception period for SBP transactions impeded by fire safety reasons.

Responses may be submitted online, or by post, until 17 March 2024 

Proposed LTT special tax sites relief 

The second LTT consultation seeks views on proposed amendments to provide relief from LTT for qualifying transactions of land within a designated Welsh special tax site.

This will include qualifying transactions within Welsh Freeports and, where appropriate, Investment Zones in Wales. 

Relief from LTT will be available where a buyer enters into a qualifying land transaction, in the period the relief is granted, where the relevant land or building is situated within a designated Welsh special tax site and is used, or is intended to be used, in a qualifying manner.

It is intended that the LTT relief will be broadly equivalent to the Stamp Duty Land Tax (SDLT) relief offered to special tax sites in England, save for six proposed changes:

• LTT relief can only be claimed in relation to land within the designated special tax site.
• Caretaker or security staff accommodation, despite being residential development, is to be considered incidental to the use for qualifying purposes and therefore qualifies for relief in all situations.
• LTT relief will use a marginally tighter definition of ‘excluded rents’ compared to Stamp Duty Land Tax (SDLT).
• LTT relief related to alternative finance arrangements will not follow SDLT in making a ‘relevant person’ liable to file the further return and pay LTT should the relief need to be withdrawn.
• LTT relief will provide withdrawal rules so they will not apply where the person who has claimed relief has disposed of substantially all their economic interest in the land.
• LTT relief will address situations where an assignment of a lease should, as in other cases, sometimes be treated as the grant of a lease.

Responses to the consultation may be submitted online, by email, or by post, until 18 February 2024 

Proposals to amend the refund and exception rules 

Question 1.1 Do you agree that, in general terms, the law should be changed to offer additional assistance to eligible taxpayers?

Question 1.2 Do you think this measure will in general terms have, or potentially will have, positive, negative or no impact on you, or on those you advise?

Question 2.1 Do you agree that transactions impeded by fire safety defects should be treated in this way? 

Question 2.2 Do you agree that transactions prevented by emergency restrictions should be treated in this way?

Question 2.3 Do you think this aspect of the new legislation will have, or potentially will have, positive impact, negative impact or no impact on you, or on those you advise?

Question 3.1 Do you agree that the new legislation should make this distinction between SBP and PBS scenarios?

Question 3.2 Do you think this aspect of the new legislation will have, or potentially will have, positive, negative or no impact on you, or on those you advise?

Question 4.1 Do you agree that the new regulations will provide benefit to taxpayers?

Question 4.2 Do you agree that the new regulations will increase cost to you?

Question 4.3 Do you agree that the benefits of the new regulations will justify the cost to you?

Question 5. What, in your opinion, would be the likely effects of the new legislation on the Welsh language?

Question 5.1 Do you think that there are opportunities to promote any positive effects?

Question 5.2 Do you think that there are opportunities to mitigate any adverse effects?

Question 6. In your opinion, could the new legislation be formulated or changed so as to:

Question 6.1, have positive effects or more positive effects on using the Welsh language and on not treating the Welsh language less favourably than English;

Question 6.2, or to mitigate any negative effects on using the Welsh language and on not treating the Welsh language less favourably than English?

Question 7. Other comments. We have asked a number of specific questions. If you have any related issues which we have not specifically addressed, please use the space below to report them, including any specific comment on the draft statutory instrument.

Proposed Land Transaction Tax (LTT) Special Tax Sites Relief 

Question 1 Do you agree that the provisions as drafted work as intended in defining the meaning of “special tax site”, and that the definition will cover the freeport sites?

Question 2 Do you agree that the provisions as drafted clearly define the meaning of “qualifying special tax site land”?

Question 3 Do you agree that LTT relief should only be claimed in relation to that land which is within the designated special tax site area?

Question 4 Do you agree that paragraphs 6, 7 and 8 of the proposed Schedule 21A achieves the tax outcome as explained in paragraph 3.10 above?

Question 5 Do you agree that the provisions as drafted work in defining the meaning of “qualifying manner”?

Question 6 Do you agree to the provision of relief for caretaker and security staff accommodation in both the full and partial special tax site relief?

Question 7 Do you agree that the provisions as drafted provide for relief for caretaker and security staff accommodation as intended?

Question 8 Do you agree that the provisions as drafted work as intended in defining the meaning of “ancillary” and doing something “in the course of a commercial trade or profession”?

Question 9 Do you agree that the provisions as drafted provide for relief for other land that is ancillary to the land used in a qualifying manner? 

Question 10 Do you agree that the provisions as drafted work as intended in defining the meaning of “excluded rents”?

Question 11 Do you agree that the definition of “excluded rents” should be widened to include rents from a caravan site and the receipt of dividends from a REIT? Will the widening of the definition have any negative impact on the delivery of the special tax sites? 

Question 12 Do you consider that the definition of “excluded rents” should also be widened to include income arising out of an interest in a limited liability partnership where section 1273(4) of CTA 2009 (winding up) (class 8 of section 605(2) CTA 2010) applies? 

Question 13 Do you agree that the provisions as drafted achieve the policy intent of providing full relief for qualifying transactions only where all of the land is within the designated tax site and all of the chargeable consideration for that land is for land to be used in a qualifying manner? 

Question 14 Do you agree that the provisions as drafted achieve the policy intent for partial relief where less than 100% but more than 10% of the chargeable consideration for land within the designated special tax site is attributable to qualifying land? 

Question 15 Are there any other specific scenarios that you consider the Welsh Government should give partial relief?

Question 16 Do you agree that the provisions as drafted achieve the policy intent that land outside the special tax site will not receive any LTT relief?

Question 17 Do you agree that the provisions as drafted achieve the policy intent that a claim to special tax site relief, where there is land within and outside the special tax site, will provide a fair amount of partial relief?

Question 18 Do you agree that the existing rules in relation to alternative finance arrangements and the withdrawal of the relief are suitable for the LTT special tax site relief?

Question 19 Do you agree that the provisions as drafted achieve the policy intent and will enable taxpayers to claim special tax site relief? 

Question 20 Do you consider that such a rule will be helpful in simplifying the obligations placed on taxpayers? Additionally, is the market value of £40,000 reasonable to achieve this simplification?

Question 21 Do you consider that any avoidance opportunities will be created by the provision of this rule?

Question 22 Do you agree that the assignment of a lease treated as a grant of lease rules should apply to the LTT special tax site relief as they do to other reliefs? 

Question 23 Do the draft regulations achieve the intended outcome that the special tax site relief is brought within the assignment of lease treated as grant of lease rules in a manner consistent with the other reliefs?

Question 24 What, in your opinion, would be the likely effects of the legislation on the Welsh language? We are particularly interested in any likely effects on opportunities to use the Welsh language and on not treating the Welsh language less favourably than English. Do you think that there are opportunities to promote any positive effects? Do you think that there are opportunities to mitigate any adverse effects?

Question 25 In your opinion, could the legislation be formulated or changed so as to: - have positive effects or more positive effects on using the Welsh language and on not treating the Welsh language less favourably than English; or - mitigate any negative effects on using the Welsh language and on not treating the Welsh language less favourably than English.

Question 26 We have asked a number of specific consultation questions. If you have any related issues which we have not specifically addressed, please use the space below to raise them.