If you’re buying a new home in Wales, you need to know about Land Transaction Tax (LTT). This tax is paid on land and property in Wales worth over a certain value (this is referred to as the price threshold). The tax only applies once this threshold is met, so LTT currently applies to properties costing £225,000 and above, or over £40,000 if buying a second home.

In this guide, you’ll discover everything you need to know about Land Transaction Tax, who pays it, and how it works.

 

What is Land Transaction Tax?

Land Transaction Tax, often referred to as LTT, is the tax paid on property purchases in Wales. It's the Welsh equivalent of the Stamp Duty that people pay in England, or Land and Buildings Transaction Tax (LBTT) in Scotland.

How is it different from Stamp Duty?

The Welsh Land Transaction Tax is one of the tax liabilities that has been devolved from the Westminster government, and it replaced Stamp Duty in Wales in 2018. You may hear it referred to informally as ‘Wales Stamp Duty’.

The key differences between LTT and Stamp Duty are the thresholds the fees apply to, the rate bands, and how the taxes apply to first-time buyers.

Who has to pay Land Transaction Tax?

Whether you need to pay Land Transaction Tax (LTT), and the amount due, depends primarily on the price of the property you're buying.

You typically pay LTT when:

• Buying a freehold property.
• Buying a leasehold property (new or existing).
• Buying a share in a property (shared ownership) or taking out a mortgage to buy a home.

However, you do not need to pay LTT if:

• The property is valued under £40,000.
• You inherit or are gifted a property.
• You receive full ownership of a shared property after a divorce or dissolution of a civil partnership.
• The property is leasehold, valued under £40,000, has an annual rent less than £1,000, and the lease is for seven years or more.
• The property is leasehold, valued within the LTT zero-rate threshold, and the lease is for less than seven years.

How much is Land Transaction Tax?

How much Land Transaction Tax is depends on two factors:

• The value of the property you are buying.
• If you own more than one property.

If the property you are purchasing is your main residence and costs below £225,000, you won’t need to pay any Land Transaction Tax. However, if the property costs over £225,000, one of several rate bands will apply. The tax is calculated on the part of the property purchase price falling within each band, as explained below.

Rates if you own one home: 

Property Price	Land Transaction Tax
Less than £225,00	0%
£225,001 to £400,000	6%
£400,001 to £750,000	7.5%
£750,001 to £1,500,000	10%
More than £1,500,000	12%

Rates if you are buying a second home:

Property Price	Land Transaction Tax
Up to £180,000	5%
£180,001 to £250,000	8.5%
£250,001 to £400,000	10%
£400,001 to £750,000	12.5%
£750,001 to £1,500,000	15%
Above £1, 500, 000	17%

Land Transaction Tax on second or buy-to-let homes

If you already have a residential property, and are looking to purchase an additional property (such as second home or a buy-to-let property), you will be charged an extra 4% in Land Transaction Tax on top of the current rates for each band, but properties costing £40,000 or less are exempt.

First-time buyers in Wales

There is no Land Transaction Tax relief for first-time buyers in Wales. First-time buyers buying a property in Wales will follow the same LTT rates as any other buyer.

At Redrow, we have the Help to Buy Wales scheme to support you on getting on the property ladder.

Do you pay Land Transaction Tax on new builds?

Land Transaction Tax applies to all properties, both old and new. Whether you owe LTT on a new build depends on the value of the property and whether the LTT rates and conditions apply. 

How much Land Transaction Tax will I pay?

Calculating Land Transaction Tax when buying a home in Wales is straightforward. LTT is calculated based on the price bands your property falls into. Here's how it works:

1. Identify the purchase price of your Redrow home.
2. Check above to see which LTT price bands apply to your property (remember that rates differ depending on whether it’s your main residence or an additional property).
3. Calculate the tax owed on the portion of the price within each band and add these amounts together.

Example:

If your new home costs £300,000, you'll pay:

• 0% on the first £225,000 = £0
• 6% on the remaining £75,000 (£225,001–£300,000) = £4,500

Total LTT due: £4,500.

If your new home costs £500,000, you'll pay:

• 0% on the first £225,000 = £0
• 6% on £175,000 (£225,001–£400,000) = £10,500
• 7.5% on the remaining £100,000 (£400,001–£500,000) = £7,500

Total LTT due: £18,000.

If you have any questions or need guidance, our Redrow new-home mortgage specialists can help you understand exactly what you'll need to pay — visit your chosen new development for more help.

When do I have to pay Land Transaction Tax?

If you need to pay LTT on the purchase of your property, you must pay the tax within 30 days of the sale transaction. This is called filing an LTT return.

Failure to send your LTT return back in time may result in you having to pay a penalty or interest on top of the LTT rate.

How do I pay Land Transaction Tax?

You must complete and send your LTT return to the Welsh Revenue Authority (WRA). Unless your transaction is specifically exempt from paying LTT, you must complete an LTT return even if you do not owe any tax on the purchase of your home.

If you are using a solicitor or conveyancer, they can complete and send back the LTT return on your behalf. This usually comes with a small fee which tends to be added to the final sum you pay them. You are still responsible for making sure your LTT return is submitted on time.

 

To the best of Redrow’s knowledge, everything in this guide is true at the time of writing. All descriptions, images and plans are illustrations, examples and/or approximations only and some processes listed may differ when buying a Redrow home, please speak with the sales team at your chosen development for more details. Redrow does not accept any liability or responsibility contractual or otherwise for any reliance on the information contained within the guide.