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.”