04.10.17
First Welsh tax in 800 years gives first-time buyers a leg-up
The Welsh Government has announced a progressive tax regime which it argues will support first-time buyers in stepping onto the property ladder.
The new rates and bands, which are Wales’ first taxes in almost 800 years, will be introduced at the start of the new tax year. Land transaction tax (LTT) will replace stamp duty, and landfill disposals tax (LDT) will replace landfill tax.
Once LTT is introduced, Wales will have the highest starting threshold for property tax in the UK, with properties costing £150,000 to £250,000 yielding 2.5% in tax. The average house price in Wales is £151,000, and the Welsh Government has claimed that nine out of 10 house buyers will face the same or less tax than under the current stamp duty regime.
Wales will have the lowest starting rate of tax on the purchase of non-residential properties in the UK, with LTT being introduced on premises costing over £150,000. It is anticipated that for freehold purchases and transactions with lease premiums, 60% of taxable transactions will pay no tax.
It is hoped that the new higher rate of LDT will act as a deterrent from disposing of waste illegally; the unauthorised disposal rate will be 150% of the standard rate. For the first two years following the introduction of LDT, the standard and lower rates will remain consistent with those for landfill tax, in order to provide certainty for businesses and reduce the risk of waste being moved across the border into England.
Professor Mark Drakeford, Welsh finance secretary, said: “The devolution of tax powers provides us with the opportunity to reshape and make changes to improve existing taxes to better meet Wales’ needs and priorities.
“These new progressive rates and bands for land transaction tax and landfill disposals tax will make a real difference to people’s lives, help change behaviours and deliver improvements to communities across Wales. We are being bold but balanced and leading the way in creating a fair and progressive tax system.”
In addition to these changes, Prof Drakeford also announced a shortlist of four new tax ideas, based on public feedback following a national debate started in July: vacant land tax; disposable plastic tax; tourism tax; and a levy to support social care. Work will continue to refine these suggestions over the coming months, and a single proposal will be posed to the UK government early next year.
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