Land Transaction Tax Update
Following our previous blog on the introduction of the Land Transaction Tax in Wales, Finance Secretary Mark Drakeford AM has confirmed the higher 3% rate of tax for second homes will continue to be levied in Wales when stamp duty land tax (SDLT) is devolved in April 2018.
Welsh ministers are due to set the rates for the tax. SDLT is projected to raise around £250m a year by 2018 in Wales alone. The most recent announcement by Mark Drakeford AM confirms that the extra 3% tax on second homes, rolled out nationally in April this year, will continue to apply in Wales. This extra tax alone is projected to bring in £9m to Wales this year, increasing to £14m by 2020.
The Welsh government carried out a technical consultation over the summer to determine how control over this higher rate could benefit Wales in the long run. This included the promising suggestion that it would help bring long-term empty properties and other second homes back into use as affordable housing.
Mark Drakeford AM, said: “This is an historic milestone in the devolution of tax powers to Wales. This bill marks another step towards the creation of taxes which are more suited to the needs of Wales.”
This marks the first time that Wales has determined its own tax policy since the English conquest and the time of Prince Llewelyn, the last sovereign prince of Wales, some 750 years ago.
In practice, there is not likely be a significant change from the current system in the short term, in order to guarantee consistency and stability for businesses. However, there will be some room to manoeuvre and Welsh ministers will, in due course, tailor the tax system to Welsh needs, which will likely mean more support for Welsh public services. This should have a positive impact on ordinary people in Wales, as the uniform Westminster tax position is fashioned into a Welsh mould by native hands.
Tod Davies, Trainee Solicitor