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New Land Transaction Tax changes from 10 October 2022 – what you need to know

Posted by: CJCH Solicitors | 7th October 2022

By Natalie Summers – Head of CJCH Solicitors Conveyancing

SDLT

Stamp Duty Land Tax (“SDLT”) is a tax imposed by the government on the purchase of land and properties with values over a certain threshold in England. The amount of SDLT payable is calculated on a % of the purchase price paid. The changes announced to Stamp Duty in the September 2022 mini-budget amend the threshold at which SDLT becomes payable. The new rates are:

House Value   Stamp Duty
£0 – £250,000 0%
£250,001 – £925,000 5%
£925,001 to £1.5m 10%
Over £1.5m 12%

This means that if you are purchasing a property for £250,000 or less then you will not pay any SDLT.

First Time Buyer

Provided you, and anyone you are buying with, are a First-Time Buyer, you will additionally benefit from 0% SDTL on the first £425,000 value of the property, under the condition that the purchase price is less than £625,000.

You will pay 5% SDLT on the portion from £425,001 to £625,000. If the purchase price is over £625,000 you cannot claim the relief.

Additional Properties

You will have to pay 3% on top of the SDLT rates if when buying a new property, following completion you will own more than one property.

You will not pay the extra 3% SDLT if the property you are buying is replacing your main residence which has already been sold.

If you have not sold your main residence on the day of completion, you will have to pay the higher rate. This is because you will own two properties. You can apply for a refund of the extra SDLT if you sell your previous main residence within 36 months of completion of your new main residence purchase.

LTT

Land Transaction Tax (“LTT”) is a tax imposed by the government and is payable on the purchase of land and properties with values over a certain threshold in Wales . LTT replaced SDLT in Wales in 2018. The amount LTT payable is calculated on a % of the purchase price paid.

The Welsh Government have announced the new tax bands after 10 October 2022 which are as follows:

House Value Land Transaction Tax
£0 – £225,000 0%
£225,001 – £400,000 6%
£400,001 – £750,000 7.5%
£750,001 – £1.5m 10%
Over £1.5m 12%%

This means that if you are purchasing a property for £225,000 or less then you will not pay any LTT.

First Time Buyer

There is no additional First Time Buyer relief in Wales

Additional Properties

You will have to pay 3% on top of the LTT rates if when buying a new property, following completion you will own more than one property.

You will not pay the extra 3% LLT if the property you are buying is replacing your main residence and that has already been sold.

If you have not sold your main residence on the day of completion, you will have to pay the higher rate. This is because you will own two properties. You can apply for a refund of the extra LLT if you sell your previous main residence within 48 months of completion of your new main residence purchase.

 

For more information, speak to our experienced residential property and conveyancing team at CJCH Solicitors. With offices across South Wales, we are here to help you.