LONDON: The UK Government and the Welsh Government have announced that they have completed preparations for the introduction of the first Welsh taxes for almost 800 years – land transaction tax and a landfill disposal tax.
Under an agreement with the UK on the devolution of tax powers, Wales will introduce its own land transaction tax and a landfill disposal tax from April 1, 2018. It will introduce its own personal income tax from 2019.
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Under the new rates for land transaction tax (LTT), Wales will have the highest starting threshold for the property tax in the UK, of GBP150,000 (USD210,500), up from GBP125,000. All buyers of residential properties costing up to GBP400,000 will pay the same or less tax than under stamp duty land tax. The average home buyer will pay nearly GBP500 less tax than under stamp duty land tax.
For properties worth up to GBP250,000, the rate will increase to 2.5 percent from two percent, and will increase by 2.5 percent at value intervals of up to GBP400,000 (five percent), up to GBP750,000 (7.5 percent), and up to GBP1.5m (10 percent). A 12 percent rate will apply on property values above GBP1.5m.
Lower rates apply to commercial property and rates for leased commercial property will be lower still. Wales will have the lowest starting rate of tax for the purchase of business premises in the UK, with all businesses buying premises up to the value of GBP1.1m in Wales either paying no tax or up to GBP1,000 less tax than under stamp duty land tax.
The Welsh Finance Secretary, Mark Drakeford, said January 26: “The devolution of these taxes represents a significant milestone for Wales, helping us to make Wales a fairer nation and to grow the Welsh economy. Today’s meeting was also an opportunity to reflect on the good and constructive relationships which have developed in taking fiscal devolution forward over this period. I look forward to this continuing.”
The Chief Secretary to the UK Treasury, Elizabeth Truss, added: “We are committed to giving the National Assembly for Wales more responsibility to raise its own funding. And that is why further income tax powers will follow next year. This will give the Welsh Government greater powers to shape their economy. The UK Government is also committed to delivering for Wales, as demonstrated by the GBP1.2bn (USD1.68bn) boost to the Welsh Government’s funding at Budget. I look forward to continuing our constructive working partnership.”
