Wednesday, February 11, 2015
The Welsh Government has launched a consultation on plans for a Land Transaction Tax (LLT), which will replace UK Stamp Duty Land Tax (SDLT) in Wales from April 2018.
The Wales Act 2014 provides for the removal of UK SDLT in Wales and confers powers on the Welsh Assembly to replace the charge with a Welsh tax on transactions involving land. The process of devolving SDLT will result in a reduction in the Welsh Government's block grant (budgetary provision from the UK Treasury), but the exact adjustment has yet to be determined.
The consultation seeks views on the potential structure of the new regime, and specifically the bands and rates for residential and non-residential transactions. It also requests comments on the LLT's application to partnerships, trusts, and companies; reliefs and exemptions; and compliance and avoidance.
The Welsh Government points out in the document that decisions about LLT rates and bands will need to be made much closer to April 2018, taking into account the shape of the wider UK SDLT regime and the fiscal climate.
According to the Welsh Finance and Business Minister, Jane Hutt, the Government had for some time been considering a move away from a slab-based system, under which a higher tax rate is payable on the whole purchase price when a threshold is crossed. The UK SDLT was slab-based until December 2014, when Chancellor George Osborne transformed it into a band-based regime.
Osborne's reforms also impacted on the Scottish Government, which is due to implement its own Land and Buildings Transaction Tax (LBTT) from April. The Scottish Government had announced rates for a band-based LBTT prior to Osborne's initiative, but later revised these rates to ensure that 90 percent of taxpayers will be no better and no worse off than under the UK SDLT.
Hutt said: "While we are not looking for change for change's sake, I am keen to explore other ways in which we can improve the current system, making it more effective, more efficient, and better suited to the priorities and needs of Wales. The introduction of Scotland's Land and Buildings Transaction Tax shows us that a tax can be developed in the spirit of the tax it is replacing but still have very different characteristics."
"We are keen to look at improvements that could make it easier to do business in Wales, ensuring we can maintain our attractiveness to commercial enterprises. When I announced my principles for Welsh taxes, I made it clear that it is important to develop taxes which are fair to people, businesses, and support growth and jobs, which in turn help tackle poverty and support communities. The impact of the changes we make to this tax will potentially be felt by a sizeable proportion of the Welsh population. That is why I urge everyone to contribute their views and help shape the first Welsh tax in over 800 years."
The consultation will run until May 6.