Welsh tax policy framework | KPMG | UK

Welsh tax policy framework

Welsh tax policy framework

The rates and bands for Wales’s new land transaction tax and landfill disposals tax have been published.

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On Tuesday 3 October, Welsh Finance Secretary Mark Drakeford released Wales’s new Budget, which sets out the Welsh Government’s new tax and borrowing powers. Alongside the Budget, a report on Welsh tax policy has been published, setting out details on two new Welsh taxes which will be introduced from April 2018. Land transaction tax (LTT) and landfill disposals tax (LDT) will replace stamp duty land tax and landfill tax respectively, and the new progressive rates and bands for these taxes have been set out. In addition, a shortlist of four new Welsh tax ideas has been published, with one of these ideas to be proposed to the UK Government in 2018.

Land transaction tax
It is predicted that around 90 percent of residential transactions which would have been taxed under stamp duty land tax (SDLT) will pay the same or less tax under LTT. The main residential rates of LTT as set out in the tax policy framework document are as follows:

Price threshold                 Main residential rates    
£0- £150,000 0 % 
£150,000- £250,000 2.5 %
£250,000- £400,000 5 %
£400,000- £750,000 7.5 %
£750,000- £1.5 million 10 %
£1.5million-plus 12 %

For additional residential properties, the higher rate of tax payable will be an additional 3 percent on top of the main residential rate in each band.

The non-residential rates and non-residential lease rates are as follows:

Price threshold                
Rates                              
£0- £150,000 0 %
£150,000- £250,000 1 %
£250,000- £1 million 5 %
£1 million-plus 6 % 

 

Net present value threshold        Rates                   
£0- £150,000 0 % 
£150,000- £2 million 1 %
£2 million-plus 2 % 

The rent element on the grant of new residential leases will not be taxed.

Landfill disposals tax 

The new LDT rates will be as follows: 

Rate    2018-19    

2019-20

Assumed rate     

Standard £88.95 £91.70
Lower £2.80 £2.90
Unauthorised disposals    £133.45 £137.55

Proposed new Welsh taxes

Four new Welsh tax ideas have been published and will be developed this year, with one of the ideas being proposed to the UK Government in 2018. The ideas are:

  • A levy to support social care;
  • Vacant land tax;
  • A disposable plastic tax; and
  • Tourism tax.

 

For further information please contact:

Sean Randall

Simon Jones


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