Land Transaction Tax returns and payments: technical guidance

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(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.

(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.

(section 46)

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

• Exemptions:
  • a transaction which is exempt from charge
• Transactions not involving a lease:
  • 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.

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.

(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.

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.

(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.

(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.

(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.

(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).

(section 51)

An initial tax position may change because of a later linked transaction. A later linked transaction may mean that:

• the earlier transaction becomes notifiable, where it was not before
• tax becomes chargeable for the earlier transaction, where none was chargeable before, or
• additional tax becomes chargeable in respect of the earlier transaction

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.

Where a later linked transaction means that an earlier transaction becomes notifiable, where it was not before, then the effective date of the transaction should be entered as the date of the later transaction on the return.

(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.

(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.

(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.

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.

(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.

(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.

(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).

(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.

(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.

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 refused 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.

(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.

(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.

(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.

(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.