Changes to rates of Land Transaction Tax (LTT)

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With an early “Christmas Surprise” for buy to let investors and buyers of second homes, Welsh Government announced in their budget on 21 December 2020 increases in the higher rates of LTT that will take effect from 22 December 2020.

Each percentage band of LTT rates for “higher rate” transactions will increase by 1% across the board which means the surcharge for the purchase of additional residential properties will increase from 3% to 4%. This will make it more expensive to purchase buy to let properties, holiday homes and purchase of properties via companies, trusts, LLPs or partnerships. “Accidental” second home owners who buy a new home before selling their old home will also have to pay the extra LTT, although they will be able to reclaim the extra LTT if the old home is sold within 3 years of buying the new home.

The old and new rates are:





Rates up to 21 Dec 2020

(additional residential properties)


Rates from 22 Dec 2020

(additional residential properties) 


Main residence rates

(from 1 April 2021)

Up to £180,000 3% 4% 0%
Over £180,000 to not more than £250,000 6.5% 7.5% 3.5%
Over £250,000 to not more than £400,000 8% 9% 5%
Over £400,000 to not more than £750,000 10.5% 11.5% 7%
Over £750,000 to less than £1,500,000 13% 14% 10%
Over £1,500,000 15% 16% 12%

It was also announced that the LTT Coronavirus “holiday” would end on 31 March 2021 and not be extended. This means the zero rate threshold will revert from £250,000 back to £180,000 for purchases that complete on or after 1 April 2021.

If clients have exchanged contracts before the end of 21 December 2021 they should be able to pay the old rates of LTT on their additional property purchase provided the contract is not amended or varied between exchange and completion (anti-avoidance rules apply).

The changes bring the rates of LTT on additional residential properties in line with the rates of land and buildings tax charged in Scotland in similar circumstances.

In a bit good news for commercial property clients, it was announced that the zero rate threshold for non-residential property purchases (and the LTT on lease premiums) will increase from £150,000 to £225,000 from 22 December 2020. The zero rate threshold for the Net Present Value (calculated on the rents) of non-residential leases will also increase to £225,000 from 22 December 2020. The other bands and rates of LTT for non-residential property will remain the same.

For more information on LTT please contact Andrew Evans.




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Andrew Evans


Partner, Cardiff

+44 (0)29 2039 1761