The main differences between Land Transaction Tax (LTT) and Stamp Duty Land Tax (SLDT).

Organisation:
First published:
26 April 2018
Last updated:

This list is not a complete statement of the differences between LTT and SDLT. You must check the relevant detailed guidance and legislation for LTT when dealing with a land transaction in Wales from 1 April 2018.

The main differences between LTT and SDLT are:

LTT SDLT
Residential leases

LTT is only payable on any premium (or other consideration) that does not consist of rent.

Rent figures are not required when completing a return for a new residential lease.

SDLT is charged on both rent and any premium (or other consideration) for a new residential lease.
Higher rates: intermediate transaction rule

The purchase of a new main residence will not be chargeable to LTT at the higher rate if a previous main residence was disposed of.

However, if the seller purchases another property (for example. buy-to-let) before completion of the purchase of a new main residence, the seller may be required to ‘look back’ to that intermediate transaction and pay the higher rates.

SDLT does not apply an interim transaction rule.
Non-residential leases: Relevant rent rule

The 0% band for premiums (and other non-rent consideration) extends to £150,000.

This band can increase to 1% where the ‘relevant rent’ exceeds £9,000.

Relevant rent is usually the highest rent payable in any year across the entire term of the lease.

SDLT does not apply a relevant rent rule.
Rates and bands

The Welsh Government sets the rates and bands for LTT.

To calculate how much LTT to pay use the WRA tax calculator.

The UK government sets the rates and bands for SDLT.

To calculate how much SDLT to pay use HMRC’s tax calculator.

Interpretation of residential/non-residential

LTT has its own specific interpretation guidance.

SDLT also has its own specific interpretation guidance, found on the HMRC website.

Reliefs

First-time buyer relief is not available.

The 0% band currently applies to purchases up to £180,000.

First-time buyer relief is available.

The 0% band currently applies to purchases up to £125,000.

Avoidance and compliance

There is an anti-avoidance rule that applies to all LTT reliefs.

The general anti-avoidance rule allows the WRA to counter any artificial tax avoidance arrangement.

There are rules that target specific aspects of particular reliefs.

The Sections 75A-C Finance Act 2003 anti-avoidance rules apply.

Deferrals
A taxpayer must supply an expected end date of the deferral and where one cannot be predicted use the 5th anniversary of the transaction. The tax payer need not supply an expected end date of a deferral period.