The Welsh Government has published a summary of responses to its earlier Land Transaction Tax (LTT) consultation which considered extending the LTT higher rates three-year exception and refund period, in specific circumstances.
Background
Higher residential rates of Land Transaction Tax (LTT) are charged on buying 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 Original consultation, launched in December 2023, sought views on extending these three years in cases where the transaction has been impeded by fire safety defects or prevented by emergency restrictions.
In 'Purchase Before Sale' (PBS) scenarios, it was proposed that the three-year period to claim refunds or exceptions would be extended:
- So that taxpayers may claim a refund where the sale of a former main residence took place on or after 1 April 2021 and was impeded due to issues relating to fire safety defects.
- To 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 would 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 was proposed that:
- The three-year period would be extended for all transactions taking place once the new rules come into force where the purchase of a new only or main residence is prevented by emergency restrictions.
The proposed new rules would not extend the three-year exception period for SBP transactions impeded by fire safety reasons.
Consultation response
The consultation received 15 responses which gave notable support for the proposed changes, with general agreement that there would be a positive impact and benefit to taxpayers.
- Responses were mostly supportive of distinguishing between SBP and PBS scenarios.
- It was generally felt that the benefit of the measures would justify the cost, although concern was noted that in some cases the new regulations could slow down housing transactions.
The Welsh Government concluded that the draft statutory instrument published in December 2023 was appropriate for laying without significant changes. Minor post-consultation amendments to address typographical and other drafting errors have been made.
It is anticipated that the draft statutory instrument will be debated in July 2024.
Updated Welsh Revenue Authority guidance will be available from the point that the new rules come into force.
Useful guides on this topic
Welsh Land Transaction Tax (LTT)
What is Land Transaction Tax? How does it operate? What reliefs are available?
Welsh LTT Rates
What are Welsh Land Transaction Tax (LTT) Rates? How do you calculate Welsh Land Transaction Tax?
Welsh LTT vs SDLT: Comparing the rates and additional dwellings charge
How does Welsh Land Transaction Tax (LTT) compare to Stamp Duty Land Tax (SDLT)? What are the key similarities and differences?
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