First new tax in Wales for 800 years

Land Transaction Tax to come into force in April 2018

28 June 2017

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Wales’s first new tax in 800 years, the Land Transaction Tax (LTT) and Anti-avoidance of Devolved Taxes (Wales) Act will come into force on 1st April 2018. It will replace Stamp Duty Land Tax (SDLT), which will cease to apply in April 2018, and while LTT will be similar to SDLT there will be some differences. The Welsh Government has set up a new government body, the Welsh Revenue Authority (WRA), to manage taxes in Wales. Its key roles will be to collect the tax on transactions of land in Wales, prevention of tax avoidance, and maintaining tax revenue. Prevention of tax avoidance is being viewed as a major priority.

Andrew Evans, Partner and experienced tax lawyer at Geldards Law Firm, who gave a lunchtime presentation to Cooke & Arkwright to explain the implications of the new legislation comments, “LTT can be summed up as ‘the same but different’ compared to SDLT.  New LTT return forms will be produced and there are subtle differences between the LTT and SDLT legislation.  It will be very interesting to see what Welsh Government decide regarding the LTT rates and bands.”

Purchasers pay the tax irrelevant of where they are based.  As long as the property being purchased is in Wales, they will be liable for the tax (although there are some exemptions). While the rate of tax has not yet been revealed, it is thought that there will be different rates for residential and commercial properties.  If six or more dwellings are purchased in one transaction, or a property in mixed use is purchased, then these will be classed as commercial. The proposed tax rates and bands are to be announced by October 2017.

The effective date of when the tax is due is usually the completion of the purchase or granting of the lease.  However there are instances where substantial performance can trigger the tax, such as if a retailer takes occupation of a shop under a licence to undertake fit-out works, or first payment of rent even if the tenant is not in physical occupation.

Graham Davies, Investment Director at Cooke & Arkwright adds: “The LTT is a significant piece of legislation that has potential to impact both values and perception of commercial property in Wales. However until the tax rates and bands are announced in October 2017 it’s impossible to predict any differential between the cost of property transactions in England and Wales. We will watch both the initial tax rates and any subsequent changes thereto with great interest.”

Cooke & Arkwright have been providing rating valuation advice to The Welsh Rugby Union Limited (“WRU”) and Millennium Stadium plc for many years. They were recently successful in achieving substantial reductions in the assessments of the Millennium Stadium, covering both the 2005 and 2010 rating list. These negotiated reductions yielded savings of c.£3.5m which, crucially, allows the WRU to re-invest in rugby throughout Wales. They advise the WRU across the group portfolio including the National Centre of Excellence in the Vale of Glamorgan. The valuation issues across the WRU portfolio are complex requiring a high level of understanding of the funding and finances of professional sport in Wales. Cooke & Arkwright’s experience and understanding of these issues and application to the rating valuation have yielded these substantial negotiated reductions. The WRU and the Millennium Stadium entrust our work to organisations with the required levels in experience and expertise in dealing with these complex issues. I am glad to say we have this expertise in Wales. I would have no hesitation in recommending ratepayers making use of this Welsh based expertise.

Steve Phillips, Group Finance Director, Welsh Rugby Union Group