Guidance on when you must make a Land Transaction Tax (LTT) return and payment of LTT to the WRA.

Organisation:
First published:
12 March 2018
Last updated:

LTTA/6010 Duty to deliver a land transaction tax return

(section 44)

A taxpayer must send the WRA a return for every notifiable land transaction that has either completed or has been substantially performed.

The return must be made within a 30 day period beginning on the day after the effective date of the transaction. Furthermore, where the transaction is also a chargeable transaction the return must also include a self-assessment. This time limit is calendar days and not working days.

The examples below show the filing dates where the land transaction occurs in a 30 day month and in a 31 day month.

Example 1

Ms A acquires her new home and has no interest in any other dwelling. The transaction completes on 7 April 2020. The transaction had not been substantially performed prior to that date. Ms A therefore has until midnight on 7 May 2020 to submit her return in time.

Example 2

Mr B acquires his new home and has no interest in any other dwelling. The transaction completes on 7 March 2020. The transaction has not been substantially performed prior to that date. Mr B therefore has until midnight on 6 April 2020 to submit his return in time.

LTTA/6020 Notifiable transactions

(section 45)

A notifiable transaction is one that is:

  • the acquisition of a major interest in land that is not covered by one of the exceptions detailed below
  • the acquisition of a chargeable interest other than a major interest in land that is not exempt from charge and tax is chargeable (or would be so chargeable were it not for a claim to a relief) at a rate of more than 0%
  • a land transaction that a person is treated as entering because of the substantial performance rules in relation to a contract providing for transfer to third party (section 11(3) LTTA), or
  • a notional or additional notional land transaction for a pre-completion transaction.

Example 1 - acquisition of a major interest

Ms A has recently moved in with Mr B after many years in a relationship. Ms A owns no other property. It is agreed that Ms A will become a tenant in common in Mr B’s home which is now their joint home. The chargeable consideration given by Ms A for the interest is £100,000. While no tax is chargeable as the consideration is within the 0% threshold for residential transactions, the transaction is notifiable as she is deemed to have acquired a major interest in land as following the land transaction she and Mr B own the major interest jointly.

Example 2 – acquisition of a chargeable interest other than a major interest

C Ltd pays Ms D, a farmer, £300,000 to erect 30 pylons on her land. The arrangement between the 2 parties is an easement and is therefore not a major interest in land, but is a chargeable interest in land. As the consideration given is greater than the 0% threshold for non-residential transactions, the transaction is notifiable.

Example 3 – substantial performance

E Ltd has entered into a contract to purchase an office block. The terms of the contract provide that E Ltd may direct that the property is transferred to a third party (F Ltd). Prior to the transfer from the seller to F Ltd E Ltd, with the agreement of the seller, takes possession of the property to obtain access to other property they own. As E Ltd has substantially performed the contract by taking possession of the property the transaction will be notifiable, as will the transaction entered into by F Ltd.

Example 4 – notional pre-completion

A Ltd has entered into a sale and purchase agreement with B Ltd for some land with a consideration of £400,000 payable on completion. B Ltd assigned its rights under the contract to C Ltd for a payment by C Ltd of £50,000.

C Ltd completed the acquisition and paid A Ltd £400,000. The transaction between B Ltd and A Ltd is a notional land transaction and therefore a notifiable transaction, entered into by B Ltd, but a claim for full relief should be available if Section 19 of Schedule 2 applies. The transaction between C Ltd and B Ltd, entered into by C Ltd is also a notifiable transaction with chargeable consideration of £450,000.

LTTA/6030 Exceptions to the notifiable transaction rules

(section 46)

Where the following conditions apply, the transaction is not a notifiable transaction:

  • Exemptions:
    • a transaction which is exempt from charge
  • Freehold:
    • an acquisition other than a grant, assignment or surrender of a lease where the chargeable consideration (including any consideration for linked transactions) is less than £40,000
  • Leases less than 7 years:
    • the grant of a lease for a term of less than 7 years where the chargeable consideration does not exceed the 0% threshold
    • the assignment or surrender of a lease where it was originally granted for a term of less than 7 years and the chargeable consideration is not greater than the 0% threshold
  • Leases more than 7 years:
    • the grant of a lease for a term of 7 years or more where the chargeable consideration other than rent is less than £40,000 and the annual rent is less than £1,000, or
    • the assignment or surrender of a lease where it was originally granted for a term of 7 years or more and the chargeable consideration is less than £40,000.

The chargeable consideration exceeds the 0% threshold if it includes any amount on which tax is chargeable at a rate of more than 0% or would be so chargeable were it not for a claim to any relief.

Example 1

Mr A is gifted a dwelling from his mother. There is no outstanding debt (for example a mortgage) on the property. There is no chargeable consideration given. The transaction is exempt from charge and the transaction is not a notifiable transaction.

Example 2

Ms B purchases a freehold piece of land costing £20,000. The transaction is not linked to any other transaction. As the chargeable consideration given is less than £40,000 the transaction is not a notifiable transaction.

Example 3

C Ltd is granted a lease on a floor of an office block for a period of 5 years. The consideration given is £100,000 and it is wholly by way of consideration other than rent (a premium). There are no linked transactions. As the lease granted is for less than 7 years and the consideration is within the 0% threshold, the transaction is not notifiable. If the lease were to continue and no longer meet either the term or the consideration condition, the transaction would become notifiable.

Example 4

D Ltd is granted a lease for a term of 6 years on 1 March 2020. The consideration given was wholly of consideration other than rent, and amounted to £200,000. This transaction was therefore notifiable as the consideration was greater than the 0% threshold. On 1 September 2024, the lease is assigned to E Ltd, an unconnected company, for £50,000. The transaction is not notifiable as the term of the lease when granted was for less than 7 years and consideration given for the assignment does not exceed the zero rate threshold.

Example 5

Mr F is granted a lease for a term of 15 years on a flat in Aberystwyth. The consideration is £35,000 premium and a ground rent of £600 per annum. The transaction is not notifiable as the consideration other than rent is less than £40,000 and the annual rent is less than £1,000.

Example 6

Mr F (from example 5 above), after 3 years, assigns his lease to Ms G. She pays £35,000 for the assignment of the lease (and takes on the obligation, as a condition of the lease, to pay the ground rent of £600). As the consideration given by Ms G for the assignment of the lease is less than £40,000, the transaction is not notifiable.

LTTA/6040 Notifiable transactions – special rules

Transactions substantially performed

(sections 10(5) and 45)

Where a transaction has been substantially performed, both the substantial performance of the contract and the completion of the contract can both be separate notifiable transactions unless the exceptions to the notifiable transaction rules apply.

Where the tax charged on the completion of the contract is higher than the amount of tax chargeable on the substantial performance of the contract, that additional amount must be included in the self-assessment for that return. The return for both the substantial performance of the contract and the return for the completion of the transaction must show the full amount of consideration payable known at the date each return is completed.

Additional special rules also apply to:

  • arrangements involving public or educational bodies
  • transfers of partnership interests, and
  • alternative property finance arrangements.

LTTA/6050 Return to include a self assessment when for a chargeable transaction

(section 44)

A self-assessment means an assessment of the amount of tax that is chargeable in respect of the transaction.

Where the consideration given for the subject matter of the transaction is less than the starting threshold for the first rate of tax above 0%, a self assessment is still required even though the amount of that self assessment will be £0.00.

Where the transaction is one where a relief is claimed but that relief results in some of the consideration still being chargeable (for example partial charities relief), or chargeable using a calculation that differs from that normally used for at the main or higher rates (for example acquisition relief where a special rate of tax is chargeable, or multiple dwellings relief), the transaction remains a chargeable transaction and a self assessment is required. The relevant reliefs are listed in section 30(3) LTTA.

LTTA/6060 Return does not need to include a self assessment when it is not for a chargeable transaction

Where the taxpayer is making a claim for a relief that provides that no amount of the consideration given is chargeable, for example group relief, then the transaction is not a chargeable transaction. These are the reliefs listed in section 30(2) LTTA. These transactions remain notifiable transactions.

Conversely, where the transaction is one where a relief is claimed but that relief does not result in all of the consideration not being chargeable, for example acquisition relief where a special rate of tax is chargeable, the transaction remains a chargeable transaction and a self assessment is required. The relevant reliefs are listed in section 30(3) LTTA.

LTTA/6070 Duty to make a return - Contingency ceases or consideration is ascertained

(section 47)

Where the chargeable consideration in a notifiable transaction is uncertain, the taxpayer must, in the return for the notifiable transaction, calculate the chargeable consideration on a reasonable basis.

In addition a buyer must make a further return, including a self assessment to the WRA, in cases where the consideration was contingent, uncertain or unascertained within 30 days of when:

  • the contingency occurs or it becomes clear that it will not occur, or
  • for cases of uncertain or unascertained consideration, the amount relevant to the calculation of the consideration (or any part of the consideration) becomes known.

and if as a result of the event:

  • the transaction becomes notifiable
  • additional tax becomes payable, or
  • tax becomes payable for a transaction where none was payable before.

Interest also becomes due from 30 days after the date of the transaction to which the return or further return relates.

These rules do not apply to cases where the chargeable consideration is rent, nor to consideration paid as an annuity.

LTTA/6080 Repayment of tax - Contingency ceases or consideration is ascertained

(section 48)

Where, as a result of a relevant event occurring, there is less tax payable in respect of a land transaction, and the taxpayer has paid that tax, the taxpayer may make a claim to the WRA for repayment.

A relevant event in relation to the contingency, or the uncertain or unascertained consideration, is when:

  • the contingency occurs or it becomes clear that it will not occur or
  • for cases of uncertain or unascertained consideration, the amount relevant to the calculation of the consideration (or any part of the consideration) becomes known.

However, where the land transaction is related to the grant of a lease, no claim for repayment may be made in relation to:

  • the repayment (in whole or part) of any loan or deposit that was treated as consideration for the transaction, or
  • the refund of any consideration given where that refund is made under arrangements made in connection with the transaction and, is contingent on the termination or assignment of the lease (or the grant of a chargeable interest out of the lease).

The taxpayer may claim a repayment by amending their return, if within the time limits permitted, or after that period, by making a claim in writing to the WRA that complies with the relevant rules. The rules concerning claims for repayment normally only permit claims to be made within the period of 4 years following the filing date for the return. Exceptionally, the rules for repayment in relation to contingent, uncertain or unascertained cases, provide an additional period in which that claim may be made, when the usual 4 year period has passed. The additional period in which a claim may be made, is a period of 12 months, beginning with the relevant date that triggered the claim to repayment.

These rules do not apply to cases where the chargeable consideration is rent, nor to consideration paid as an annuity.

LTTA/6090 Duty to make a return – further return where relief is withdrawn

(section 49)

A buyer must make a further return if relief is withdrawn in relation to a disqualifying event in relation to:

  • relief for alternative finance investment bonds
  • relief for certain acquisitions of residential property
  • group relief
  • reconstruction or acquisition relief, or
  • charities relief

Where such a return is required it must be sent to the WRA within 30 days, beginning with the day after the disqualifying event occurred, and must include a self-assessment.

Interest also becomes due from 30 days after the date of the transaction to which the return or further return relates.

LTTA/6100 Duty to make a return - Single return in respect of linked transactions with the same effective date

(section 50)

If there are 2 or more linked transactions with the same effective date, the buyer (or buyers where appropriate) may make a single return as if all the transactions were a single notifiable transaction. Where the buyers of the transactions are different, but connected persons, they may request separate WRA certificates for land registration purposes (although those certificates will show all named buyers on each certificate).

Example 1

A Ltd and B Ltd are group companies and connected persons. They each contract with Z Ltd to acquire the freehold for 2 shops (one in Bangor and the other in Newtown). The completion date for the contracts is the same date and both contracts complete (without prior substantial performance) on 1 June 2019. As the effective date for the 2 transactions is the same and the seller is the same person (or, where relevant, a person connected to them) a single return can be made.

LTTA/6110 Duty to make a return – return as a result of a later linked transaction

(section 51)

Where there is a later linked transaction that is linked to an earlier transaction, and as a result of the later linked transaction:

  • the earlier transaction becomes notifiable
  • additional tax becomes payable in respect of the earlier transaction, or
  • tax becomes chargeable for the earlier transaction where none was chargeable before.

Where such a return is required, it must be sent to the WRA within 30 days, beginning with the day after the effective date of the later transaction. It must include a self-assessment.

Example 1

Mrs A acquires a freehold field from Mr B on 1 March 2020. The consideration given is £85,000. The transaction is therefore notifiable, although no tax is payable. The last date by which the return must be made is 31 March 2020. The acquisition is the first of a series of transactions that are linked. On 1 April 2021 a second freehold field is acquired as part of the scheme of transactions. The consideration given for that field is £100,000. The total linked consideration for both transactions is therefore £185,000. The zero rate threshold is £150,000, and thereafter the rate of tax is 1%. The total tax liability is £350 (£35,000 x 1%). Therefore, there is tax payable on both the first (£161 (£350x(85,000/185,000)) and the second (£189 (£350x(100,000/185,000) transactions. As tax is now chargeable for the first transaction where none was chargeable before, a further return is required for that transaction. Likewise a return is required for the second transaction. The last filing date for both returns is 1 May 2021, that is, 30 days beginning with the day after the effective date for the second transaction.

LTTA/6120 Declaration

(section 53)

A return must include a declaration by the buyer that the return is, to the best of their knowledge, correct and complete.

For a paper return this must be the buyer(s) signature(s).

Where the buyer has authorised an agent to complete the return, it is possible for the agent to complete, or be treated as completing, the declaration.

In cases where the declaration is made by the agent on behalf of the buyer, the buyer must have confirmed with their agent that, with the exception of the relevant date if necessary, the information in the return is correct and complete to the best of the buyer’s knowledge. If the buyer is in a position to confirm the relevant date to their agent, then the declaration is made by the agent on behalf of the buyer for the entire return.

However where the buyer has not been able to confirm the relevant date, then the agent is declaring on behalf of the buyer that all the information in the return is correct and complete to the best of the buyer’s knowledge, and that the relevant date is, to the best of the agent’s knowledge, also correct.

Therefore there are 3 different declarations on the tax return:

  1. A declaration by the buyer who is completing the tax return themselves
  2. A declaration by an agent on behalf of the buyer that all information in the tax return, including the relevant date, has been confirmed by the buyer to be complete and correct to the best of the buyer’s knowledge
  3. A declaration by an agent on behalf of the buyer that all the information in the tax return, except the relevant date, has been confirmed by the buyer to be complete and correct to the best of the buyer’s knowledge, and the agent is declaring themselves that the relevant date is correct to the best of the agent’s knowledge.

The relevant date means, in most cases, the effective date of the transaction. However, special rules apply for the following cases when the relevant date is: 

  • the date on which the event occurs, that means a return must be made as a result of a contingency occurring (or it becomes clear it will not occur) or the consideration, where uncertain or unascertained, is ascertained
  • the date on which the disqualifying event occurs, that results in a further return being required as a result of a relief being withdrawn
  • the effective date of the transaction for the later linked transaction which triggers the requirement to make a return in relation to an earlier transaction, or
  • the effective date of the transaction that triggers the requirement to make a return for an interim transaction in relation to a higher rates residential property transaction.

LTTA/6130 Buyer with a disability: declaration by the Official Solicitor

(Section 54)

A buyer may be represented by the Official Solicitor to the Senior Courts (the Official Solicitor) if they have a disability (for the purposes of the Equality Act 2010). A return completed by the Official Solicitor, in which they declare that the return is, to the best of their knowledge complete and correct, will satisfy the requirements of the buyer’s declaration.

Similarly, where an agent is acting for the Official Solicitor then where the declaration is made by the agent, the Official Solicitor must have made a declaration that, with the exception of the relevant date, the information in the return is correct and complete to the best of their knowledge.

The declaration by the agent in the return, is only made in relation to the relevant date and the agent’s declaration is that the relevant date is, to the best of the agent’s knowledge, correct.

LTTA/6140 Declaration by person authorised to act on behalf of an individual

(section 55)

Where the buyer is an individual, the requirement that they make a declaration (either in relation to the whole return, or in relation to the information in the return except the relevant date) is treated as met where the declaration is made by a person authorised to act on behalf of the individual.

A person is authorised to act only where that person has power of attorney in writing signed by the individual on whose behalf they are acting.

LTTA/6150 Liability for and payment of tax

Liability for tax

(section 56)

The buyer in a chargeable transaction, is chargeable to the tax based on a self-assessment. They must make payment of the tax in accordance with the requirements of the Tax Collection and Management (Wales) Act 2016.

Payment of tax

(section 57)

Where a taxpayer has made a return and there is an amount of tax payable, that amount of tax must be paid by the taxpayer, no later than the filing date for the return.

In the event that a taxpayer amends their return, the taxpayer must pay any tax or additional tax as a result of that amendment, either by the filing date for the return, or when the amendment is made, if later than the filing date.

LTTA/6160 Deferral of Tax – Contingent or uncertain consideration

(section 58)

Where consideration is contingent, the taxpayer must, in the return for the transaction, calculate the chargeable consideration on the basis that the outcome of the contingency is that consideration will be payable, or will not cease to be payable.

Where the consideration is uncertain, the taxpayer must, in the return for the transaction, calculate the chargeable consideration on a reasonable basis.

See the guidance at LTTA/2440 for more information about what is ‘contingent’ and what is ‘uncertain’ consideration.

For both cases where the consideration is contingent or uncertain, but not for cases where the consideration is unascertained at the effective date of the transaction, the taxpayer may request that the tax arising on the contingent or uncertain consideration is deferred. However, a deferral request can only be made if the contingent or uncertain consideration, or part of it, is payable more than 6 months after the effective date of the transaction.

Deferral requests cannot be made where the consideration is not contingent or uncertain, but is being paid in instalments to the seller.

Where the taxpayer wishes to defer tax they must:

  • make the return and deferral request on or before the filing date for the return
  • specify the amount to be deferred
  • provide the calculation of the amount to be deferred (LTTA/6230)
  • set out why the consideration is contingent or uncertain and why the deferred consideration is to be paid at a future date
  • propose an expected end date (LTTA/6180) for the deferral period (or state a date 5 years from the effective date if the expected end cannot be predicted)
  • make the deferral request in a manner that meets the requirements for the taxpayer to give notices to the WRA.

If the taxpayer’s request meets these requirements, as long as the WRA is satisfied that the amount requested to be deferred does not exceed the deferrable amount and the land transaction is not a tax avoidance arrangement (or part of such an arrangement), the WRA must accept the request.

Where the WRA is not satisfied that the request meets the conditions, it must refuse the request.

However, where the WRA believes that the amount requested to be deferred by the taxpayer exceeds the correct deferrable amount, but all other aspects of the request comply with the requirements, it may grant a deferral of an amount that it believes is correct. Similarly, where the WRA believes that the end date of the deferral period differs from that requested by the taxpayer it may determine a different date.

LTTA/6170 Deferral period

(section 58)

The deferral period begins with the filing date for the return and ends with the earlier of:

  • the expected end date, or
  • if the deferred consideration is contingent - the date on which the contingency occurs (or it is clear that it will not occur), or
  • if the deferred consideration is uncertain - the date the consideration becomes ascertained.

The effect of this rule is that where a taxpayer’s deferral request is agreed, if the deferred consideration is paid earlier than the expected end date, the taxpayer is under an obligation to pay the relevant amount of tax associated with that deferred consideration.

LTTA/6180 Expected end date

(section 58)

The expected end date is:

  • the date on which the contingency is expected to occur or to become clear that it will not occur
  • the date on which the consideration is expected to be ascertained, or
  • if the end date cannot be predicted, the fifth anniversary of the effective date of the transaction (and where there is a variation to the deferral request, the 5th anniversary of the previous expected end date).

Example 1

A Ltd enters into a transaction as buyer with an effective date of 1 March 2020. It makes its return and deferral request for contingent consideration in time, requesting that tax be deferred until 20 April 2021. The deferral period is therefore 31 March 2020 (the filing date for the return) and ends on 20 April 2021 (the expected end date).

Example 2

B Ltd enters into a transaction as buyer with an effective date of 1 March 2020. It makes its return and deferral request for contingent consideration in time, requesting that tax be deferred until 31 August 2027. The deferral period therefore starts on 31 March 2020 (the filing date for the return) and ends on 31 August 2027 (the expected end date). As the expected end date is known, it must be used, even though it is a longer period than the 5 year period that should be used when the date cannot be predicted.

Example 3

C Ltd enters into a transaction as buyer with an effective date of 1 March 2020. It makes its return and deferral request for contingent consideration in time. While C Ltd knows the contingent consideration that needs to be paid (and that LTT will need to be paid at the same time), it cannot predict the date on which that contingent consideration will need to be paid. C Ltd therefore makes a deferral request for a deferral period from 31 March 2020 (the filing date for the return) to 1 March 2025 (the 5th anniversary of the effective date of the transaction). In the event that the event has not occurred on or before 1 March 2025, C Ltd may request a variation of the deferral. If the expected end date is known, that date must be used. If the end date is not known or cannot be predicted, C Ltd must use the 5th anniversary of the previous expected end date. The new expected end date in these circumstances will be 1 March 2030.

LTTA/6190 Notice of WRA decisions

(section 60)

The WRA, when considering a deferral request either in line with the taxpayer’s request or varied from the taxpayer’s request, must:

  • determine the amount of tax to be deferred
  • determine the expected date on which the deferral period ends

and may:

  • impose conditions that it believes are appropriate (for example payments at different dates, rather than at the end date of the contingency etc.

The notice of the decision in relation to the taxpayer’s deferral request must be sent to the taxpayer and it must specify:

  • the deferred amount (and where relevant any amount that WRA does not consider should be deferred, but was requested by the taxpayer)
  • the expected end date of the deferral period
  • any conditions the WRA makes in relation to the deferred amount, and
  • if the deferred amount is lower than requested by the taxpayer the reason for that decision.

Where the WRA refuses a deferral request entirely, or in part, it must issue a notice to the taxpayer setting out the reasons for that refusal. If the taxpayer disagrees with the decision, they may ask for a review of the decision or appeal against the decision.

LTTA/6200 Effect of the WRA’s decision in relation to a deferral request

(section 61)

WRA agreement to deferral request

Where a deferral request has been agreed, the taxpayer must pay the deferred amount (or amounts when there are several relevant deferral dates), before the end of the day on which the deferral period ends.

Interest on the deferred amount will start accruing on the date following the date on which that amount should have been paid. The effect of this is that interest is not charged during the period of the deferral, but is charged from the day after the date the deferral period ends.

Where a taxpayer makes an estimate of the uncertain consideration that is lower than the actual additional consideration that later has to be paid, late payment interest will apply to the difference between the deferred amount and the actual additional consideration paid. This interest will date back to the payment date of the original transaction. The interest on the amount that was deferred will start to accrue on the date following the date on which the amount should have been paid.

Example 1

A Ltd makes a deferral request that the WRA agrees in full. The land transaction occurred on 1 September 2020.The return for that transaction was made on 20 September 2020 on the same day a deferral request was sent to the WRA. It was received on 24 September 2020. The return shows £200,000 tax payable. The deferral request results in £50,000 being payable by 1 October 2020 with the remainder payable in 2 separate amounts related to separate and distinct contingencies in the contract. The first, if the contingency occurs, is due to be paid on 1 November 2021 (resulting in £30,000 tax), and the second on 1 March 2022 (resulting in £120,000 tax). The first deferred amount of tax is due to be paid on 2 November (the day after the deferral period ends). A Ltd does not make payment of this amount of tax until 20/12/2021. Interest therefore accrues over the period from 3 November 2021 until 19 December 2021. A Ltd pays the tax due on the second contingency on time on 2 March 2022. No interest accrues on this amount.

Example 2

B Ltd makes a deferral request that WRA agrees in full. The land transaction occurred on 1 September 2020 and included an overage clause. This stated that, should the buyer obtain planning permission for a residential development, then 50% of the uplift in the value of the land should be paid to the seller as additional consideration. The return for that transaction was made on 20 September 2020 on the same day that a deferral request was sent to WRA. The return was received on 24 September 2020 and showed £100,000 tax payable and included a reasonable estimate of the future value of the land (should B Ltd obtain planning permission). The deferral request results in £75,000 being payable by 1 October 2020, with the remaining £25,000 payable if the taxpayer obtains planning permission within 5 years.

The taxpayer obtains planning permission for a residential development on 1 October 2022, which results in the land rising in value by more than the taxpayer originally estimated. This results in an additional LTT charge of £30,000, which is £5000 more than was included in their deferral request. Provided that B Ltd makes a return and pays the additional tax by 1 November 2022, then the deferred amount of £25,000 will not accrue interest. The remaining £5000 of tax will accrue interest from 2 October 2020.

WRA rejection (in full or part) of a deferral request

If the deferral request is refused in part or full then the amount of the tax that has been accepted to be deferred must be paid by the later of:

  • the date on which the taxpayer receives the notice of WRA’s decision, or
  • the filing date for the return.

If the taxpayer disagrees with the decision, they may ask for a review of the decision or appeal against the decision. 

Interest on the amount the WRA does not agree should be deferred, starts to accrue on the later of the date on which:

  • the taxpayer receives notice of the WRA’s decision, or
  • the filing date for the return.

The effect of this is that the taxpayer does not accrue interest on late payment of tax during the period that the WRA is considering the deferral request. However, interest is accrued as soon as the taxpayer becomes aware of the WRA’s decision.

LTTA/6210 Variations of deferral requests

(section 62)

Once the WRA has agreed to a deferral request the taxpayer may ask for a variation to that deferral agreement. The request for a variation can only relate to:

  • a change to the expected end date, or
  • the variation or removal of a condition imposed by the WRA.

Any request for a variation must also be accompanied by an explanation of the change in circumstances that has led the taxpayer to believe that the deferral decision should be changed, varied, or removed.

The WRA may agree or refuse the request. The WRA must send a notice of its decision in relation to the deferral request, including the reasons for that decision, to the taxpayer. If the taxpayer disagrees with the decision they may ask for a review of the decision or appeal against the decision.

LTTA/6220 Failure to comply with the WRA’s agreement to defer

(section 63)

There may be situations where the WRA believes that the taxpayer has failed to comply with a condition that is part of the agreement (or the varied agreement), or that the taxpayer has provided false or misleading information or has withheld information from the WRA. In such a situation the deferral request is treated as never having been made, and, as a result, interest accrues from the day after the filing date for the return.

If the WRA wishes to undo the deferral request it must issue a notice to the taxpayer setting out the decision and the reasons for that decision. If the taxpayer disagrees with the decision they may ask for a review of the decision or appeal against the decision.

LTTA/6230 Calculation of deferrable amount

(section 59)

The deferrable amount must be calculated in the following manner:

Step 1

Calculate the amount of tax chargeable on the chargeable consideration.

Step 2

Determine the amount of the chargeable consideration that is the deferred chargeable consideration. This is the amount of the chargeable consideration that:

  • has not been paid (but is not rent or an annuity)
  • is contingent or uncertain
  • does not consist of rent (as defined under Schedule 6 LTTA) or an annuity to which section 21 LTTA applies, and
  • is to be paid on one or more future dates that fall more than 6 months after the effective date of the transaction.

Step 3

Calculate the amount of tax chargeable on the amount of chargeable consideration, less the amount of deferred chargeable consideration. That is, the amount of the chargeable consideration less the amount established at Step 2.

Step 4

Deduct the amount of tax established at Step 3 from the amount established at Step 1. The amount of tax established is the deferrable amount.

Example 1

A Ltd acquires an office building from B Ltd in the centre of Wrexham. The consideration given is £500,000 with a further £300,000 payable if planning permission is granted for the building to be altered to residential flats. The building is acquired on 1 June 2020 and the initial £500,000 paid. A Ltd sends in its return on 20 June 2020 showing the chargeable consideration as £800,000 with a request to defer the tax on the £300,000 contingent amount. A Ltd anticipates that the planning decision will be made by 1 February 2021, following plans being drawn up and submitted.

A Ltd establishes the deferrable amount of tax using the 4 steps in the following manner:

  1. tax on chargeable consideration of £800,000 is £30,000
  2. deferred chargeable consideration is £300,000 (£800,000-£500,000)
  3. tax on chargeable consideration of £500,000 (i.e. chargeable consideration (£800,000) reduced by the deferred chargeable consideration (£300,000)) is £17,000
  4. the tax that is the deferrable amount (amount of tax at step 3 (£17,000) deducted from the amount of tax at step 1 (£30,000) is £13,000.

A Ltd can therefore make a request for £13,000 of tax to be deferred. A tax return could become due when the contingency ceases or the consideration is ascertained.

LTTA/6240 Registration of land transactions

(section 65)

The LTT legislation provides that no notifiable land transaction, and no document evidencing or effecting such a transaction, can be registered at HM Land Registry unless a WRA certificate is issued by the WRA, evidencing the submission of a duly completed land transaction return.

Before a WRA certificate is issued, the WRA must be satisfied that:

  • a return for the transaction has been received, and
  • the return is complete (see below) and includes a declaration.

If the return is a chargeable transaction the WRA must also be satisfied that:

  • the return includes a self-assessment, and
  • on the basis of the information in the return, the self-assessment appears to be correct.

A return is considered to be complete for the purposes of issuing a WRA certificate, if it is capable of being made online or is capable of being captured electronically by the WRA, if in paper. The issuing of the WRA certificate is not a confirmation that the return made by the taxpayer is correct, or that the self-assessed tax has been paid. The WRA may still make corrections to, or enquire into returns for which a WRA certificate has been issued.

A WRA certificate must be in writing and must contain the following information:

  • the address of the land
  • the title number of the land in the Land Register (if provided to WRA in the return)
  • the National Land and Property Gazetteer Unique Property Reference Number (if provided to WRA in the return)
  • the description of the transaction
  • the effective date of the transaction
  • the name of the buyer and the seller.

The certificate must accompany the relevant application to enable the land transaction to be registered at HM Land Registry.

The WRA may provide duplicate certificates if it is satisfied that the original has been lost or destroyed. That duplicate certificate can either be a WRA certificate equivalent to and replacing the original, or a new WRA certificate superseding the original.

Where a single land transaction return relates to a transaction involving a number of properties, (that is a number of title numbers), the taxpayer may ask the WRA to provide separate WRA certificates for each property transferred. In the absence of such a request, a single WRA certificate will be issued.

However, a WRA certificate issued for a transaction that is a land transaction for the purposes of LTTA, but is not a land transaction for the purposes of HM Land Registry, should not be sent to HM Land Registry. Transactions that are land transactions for LTTA but not for HM Land Registry include:

  • contracts that are substantially performed
  • notional and additional notional transactions for pre-completion transactions
  • agreements to lease treated as a land transaction, and
  • variations of a lease treated as a land transaction.

Special rules apply to transactions where there is land, transferred as part of a single land transaction, in both Wales and England.