Check if you must pay the higher rates of Land Transaction Tax (LTT) when you buy a residential property in Wales.
For residential property, there are 2 rates of LTT: main and higher. This guide outlines when and why the higher rates of tax apply.
The rates are set by the Welsh Government.
When you do not have to pay LTT
You will not have to pay LTT if you:
- buy a property for less than £250,000 (and you do not own any other property)
- buy a new lease for less than 7 years
When the higher rates apply
You will usually pay higher LTT rates when both of the following apply:
- you buy a residential property worth £40,000 or more
- you already own 1 or more other properties (see below)
Include any residential property that:
- is owned on behalf of children under the age of 18 (parents are treated as the owners, even if the property is held through a trust and they are not the trustees)
- you have an interest in as the beneficiary of a trust
If you’re married or in a civil partnership
The rules apply to both of you as if you were buying the property together, even if you’re not.
If higher rates apply to either of you individually, higher rates apply to the transaction as a whole.
Buying with someone else
The rules apply to each person buying the property (and their spouse).
If higher rates apply to any of you individually, higher rates apply to the transaction as a whole.
When the higher rates do not apply
You will not usually pay higher rates if:
- you use your new property as your main home and have sold the last main home you owned before you buy your new home (or on the same day), or
- any of the following apply to the property you’re buying:
- is worth less than £40,000
- a mixture of residential and non-residential space (like a shop with a flat above it)
- is ‘moveable’ like a caravan, houseboat or mobile home
- a freehold property with a lease on it which has more than 21 years left to run, held by someone unconnected to you
How changes to the higher rates in December 2020 could affect you
The new rates apply from 22 December 2020, so if you complete on buying a property:
- before 22 December you pay the previous rates of tax
- on or after 22 December you pay the new rates of tax
There’s an exception if you’ve exchanged contracts before 22 December but not completed. Here you can use the previous rates of tax as long as there are no substantial changes to the transaction between exchanging and completing.
To use our tax calculator in this situation, you must use the exchange date as the ‘Effective date of the transaction’ so that the calculation is made using the correct rates and bands.
We have transitional guidance on the higher rates change. This expands on these rules.
When and how to get a refund
If you sell your previous main home within 3 years of buying your new main home, you can usually apply for a refund.
This refund is the difference between the higher and main rates amounts.
If you buy a new main home but have not yet sold your old main home, higher rates will still apply to the transaction.
You cannot get a refund if:
- you or your spouse or civil partner still own any part of your previous main home
- the higher rates still apply to you for another reason
Reliefs and exceptions
You may qualify for a relief that reduces the amount of LTT you pay or an exception so you don’t have to pay.
If you buy more than 1 property, you may be eligible to claim multiple dwellings relief.
If you buy a property that consists of 2 or more dwellings, the subsidiary dwelling exception may apply.
If you're buying 6 or more properties, you can usually choose to pay either the:
- non-residential rates of LTT, or
- higher rates of LTT with multiple dwelling relief
Higher rates are a complex area of the tax. This guidance does not cover all scenarios and should not be solely relied upon to work out whether you must pay any tax.
For a more detailed explanation, see our technical guidance.