Buying property is about to get a little more complicated, as the taxes you pay on purchase will be different in Wales, Scotland, and the rest of the UK from 1 April 2018.
In Wales, Land Transaction Tax (LTT) will apply to residential property purchased for over £180,000, with a starting rate of 3.5% in the band to £250,000. This contrasts with the starting rate of Stamp Duty Land Tax (SDLT) in England and Northern Ireland of 2% for properties in the band £125,001 to £250,000. In Scotland the starting rate of Land and Buildings Transaction Tax (LBTT) is also 2% but that applies to properties valued at over £145,000, up to £250,000.
However, there is an exemption from SDLT on the first £300,000 of the property value for first-time buyers from 22 November 2017, where the total value of the property doesn’t exceed £500,000. The Scottish Government will also apply a first-time buyer exemption from LBTT on the first £175,000, from a date to be announced in 2018/19.
The Welsh Government has decided not to cut LTT for first-time buyers, as the average price of a home purchased by such individuals in Wales is £135,000, below the starting point for LTT.
All three countries impose a 3% supplementary charge on the value of residential property purchased by companies or as a second home, where the value of the property exceeds £40,000. However, the detailed rules for the supplementary charge differ in each country.
Action Point!
Check the taxes to be payable on purchase before exchanging contracts to buy property.
