How Welsh Revenue Authority (WRA) statistics meet the Code of Practice for Statistics and the dimensions of value, trustworthiness and quality.
Introduction of LTT
We introduced these statistics to meet the immediate user requirement for data on Land Transaction Tax (LTT), following the WRA being established. See further information on Land Transaction Tax.
Statistics published in other UK countries
HMRC and Revenue Scotland publish statistics for the equivalent taxes in England and Scotland, respectively.
- Stamp Duty Land Tax Statistics for England (including previous statistics for Wales)
- Monthly Property Transactions Statistics for the UK
- Monthly Land and Buildings Transaction Tax statistics for Scotland
Comparing LTT statistics with property sales data used in the UK House Price Index (HPI)
The Office for National Statistics (ONS) publish monthly statistics on house prices in the UK. The ONS use a variety of data sources to produce the UK House Price Index (HPI). This includes data from HM Land Registry on land registrations for England and Wales. Alongside HPI statistics, the ONS publish the monthly number of residential property sales.
We compared the numbers of property sales from this source with our LTT statistics. While the trends are broadly similar in the two sources, the number of residential LTT transactions is generally higher than in the sales data from the HPI. We believe the main reason for the difference is that the ONS excludes particular transactions when producing the HPI statistics. We believe the two main factors are
- Commercial transactions of residential properties (namely, where the buyer or seller is a corporate body, company or business). We can broadly account for these in LTT data, and these transactions can be seen to account for some of the difference.
- Sales that were not for full market value. Although we can’t easily account for these in the LTT data, the average property value in LTT transactions is generally below that within the HPI statistics (despite the counts of transactions being higher). This suggests that including what are lower value transactions in the LTT data is having an impact on the comparison.
The above transactions are included in LTT statistics, but not within HPI statistics.
The ONS also exclude certain other transactions from the HPI, which we believe have less impact on the comparison. Further information on these exclusions is available in ‘About the UK House Price Index’ reports.
Dates used in LTT statistics
Data presented in our statistical releases is based on the effective date of the transaction. The effective date is when the tax becomes liable to be paid, usually when a transaction is completed on a property. Whilst using the effective date in analysis can lead to greater volatility in the data (for example, due to a change in taxation rates), and revisions in successive releases and data reports, this date relates to the point at which the transaction took place and not a notional future date when the tax return was received. This also means that the series created from our analysis will reflect changes in tax rates and policy at the time that any changes take place.
We are aware that some other publications in the UK base their analysis on the date that the tax return is submitted. We have therefore produced some comparable figures to other UK countries (using date submitted) in our annual LTT statistics.
Revisions to and timing of LTT statistics
Land Transaction Tax statistics are regularly revised. The effect of revisions is analysed in monthly and quarterly LTT statistics, with commentary provided in quarterly LTT statistics.
We explain the timing of LTT statistics in our policy on statistical outputs.
We have produced these statistics in line with the Code of Practice for Statistics.
As a new producer of official statistics, we are developing our statistical publication processes and have previously published our policy on statistical outputs. This includes:
- the professional standards which were adhered to as part of the creation of these statistics
- how the content and timing of outputs is independently managed by the WRA Lead Official for Statistics
- how we notify users of upcoming outputs
- how data is collected, stored and managed, and
- that staff involved in producing statistics will undertake continuous professional development in line with the Civil Service competency framework and the Government Statistical Service (GSS) competency framework
We have assessed the interest and potential quality concerns in line with the Government Statistical Service guidance on the use of administrative data. The table below presents our current assessment.
|Date source||Public interest profile||Level of risk of quality concerns||Level of assurance information to be developed|
|LTT Registration data||Low||Low||A1 – basic assurance|
|LTT Tax returns||Medium||Low||A2 – enhanced assurance|
While preparing each statistical release, we have continued to work closely with WRA operational staff to identify further issues during data collection and processing of individual returns. We continue to apply quality controls which provide immediate analysis of tax returns which flag up potential areas of concern. Where a tax return is amended by the WRA operational team, the organisation filing the return is contacted to confirm the amendment.
We are also continuously working with internal colleagues to identify options to mitigate these issues at the point of collection for future returns, which will indirectly lead to improved data quality.
The WRA operations team are also considering risks to tax collected. Addressing risks could indirectly improve data quality in some areas.
It is also worth noting that most LTT data are supplied by organisations working on behalf of the taxpayers, some of whom submit transactions on a regular basis (around 10 per cent of organisations supply around four-fifths of the tax returns). This has led to data quality improvements as the WRA has developed its relationships with many of these key organisations.
Around 3,300 organisations are registered for online LTT submissions, with a total of around 9,300 registered online users. Most organisations have submitted at least one return. Examples of quality issues we have previously discovered and our response to date are:
In addition to these examples, we have also considered the restricted reporting of certain larger transactions, which may be at risk of disclosure. With any transaction of sufficient size, there is a risk of revealing something about them when publishing aggregate statistics.
Our approach is to balance that risk against the need to publish a meaningful figure for the total tax raised under LTT.
To do this, we have created a bucket category for each year, in which only the total tax due of all these transactions is reported, rounded with less precision (to the nearest million pounds). This bucket will reveal nothing other than the year in which the transaction occurred.
The number of transactions going into the bucket, the total value of the land/property involved in those transactions, and any sense of the distribution of the transactions (e.g. between residential and non-residential) is not presented.
An alternative approach of simply leaving out these bucket transactions was considered. However, this would provide an incomplete picture of LTT revenue. Furthermore, any payments of tax associated with these transactions will legally need to appear in the WRA’s annual accounts. Any difference between those accounts and our published statistics (if we excluded the tax due) would therefore reveal the bucket value with limited accuracy anyway. The approach we have taken to include the bucket is therefore considered to be a proportionate and balanced one.
In our published analysis of transactions by narrow value band, we have stress tested the use of nearest £100k rounding on some of the forecasting models and found there to be little impact when this was reduced to £10k.
Quality of geographic data
Our annual statistics provide a breakdown by local authority and Welsh Index of Multiple Deprivation (WIMD) area. This data is also published on the StatsWales website alongside data for National Assembly constituencies.
The local authority field is mandatory for completion on all tax returns, while the postcode is an optional field on the tax return. We can only use the postcode on the tax return to establish the National Assembly constituency or Welsh Index of Multiple Deprivation areas in which a transaction took place. The postcode is either missing or invalid on nearly 5% of tax returns.
In our analysis of local authority data, we derive the local authority from the postcode by looking this up on the ONS’s National Statistics Postcode Database (NSPD). We then compare this information to the local authority selected on the tax return.
- In 95% of cases, the local authority derived from the postcode matches the local authority provided on the tax return.
- Where this is not the case, we look at whether the two local authorities are neighbouring (for example, Cardiff and Newport are neighbouring):
- if yes (neighbouring), we use the local authority provided on the tax return for our statistics. This is the case for around 0.3% of tax returns
- if no (not neighbouring), we use the local authority derived from the postcode for our statistics. This is the case for less than 0.1% of tax returns. In this circumstance, we believe the postcode is more likely to be correct and that the local authority provided on the tax return is more likely to be incorrectly chosen.
- In the other 5% of cases where the postcode is missing or invalid, we take the local authority as supplied on the tax return.
Most transactions have one land item associated with them, although some transactions have more than one piece of land associated. We must use details of each land item to determine the local authority. To avoid duplicating transactions with more than one piece of land, a fraction (equal to one divided by the number of land items) has been applied to the transaction and tax due for each. This ensures the data are apportioned between the relevant local authorities whilst maintaining consistency with the overall count of transactions and value of tax due at Wales level.
In our annual statistical release, local authority data is presented for residential and non-residential transactions and tax due, whilst local authority data on the value of properties taxed (known as the consideration) is presented for residential transactions only. This is because there are some non-residential transactions with a particularly large consideration and a possible risk of identifying a taxpayer if we were to publish annual local authority data on these. In future, we will investigate the viability of combining several years of non-residential transactions to support safe publication of consideration data.
In addition, we have published analysis for National Assembly constituencies and Welsh Index of Multiple Deprivation (WIMD) for residential transactions only. As the postcode on the tax return is used to derive these geographies, we have discovered that where the postcode is not supplied, there is a clear bias towards larger non-residential transactions. As these transactions cannot be allocated to a National Assembly constituency or WIMD area, the resulting statistics are not reliable. Therefore, it is not currently appropriate to produce statistics on non-residential transactions for National Assembly constituency or WIMD areas.
Properties sold more than once in a year
All our LTT statistics count transactions during the time period stated, in which the same property or piece of land may have been sold more than once. Our best estimate is that between 4% and 5% of transactions involved a piece of land which has been sold more than once in 2019-20.
When do purchasers pay higher rates?
A number of factors can mean a residential transaction is subject to higher rates. These include:
- purchasing buy-to-let properties
- buying a second home or holiday home
- buying a new property while trying to sell an existing one
- companies like social housing providers buying properties
The LTT statistics only include properties sold in the past year. They don’t represent the full stock of properties in any local authority.