The Future of Land Duty Tax in Wales in Commercial & Agricultural Property Transactions

6 April 2015

Lucy Morris, Partner and the Head of the Commercial and Agricultural Property team at Redkite Solicitors explains the Welsh Government’s consultation of Stamp Duty Land Tax in Wales and how you can have your say on its future.

Stamp Duty Land Tax (SDLT) was introduced in England and Wales in 2003 to replace Stamp Duty. SDLT is a self-assessed tax on land transactions with separate rates on residential and non-residential transactions. Non-residential transactions include:-

– commercial property such as shops, factories, offices etc;

– agricultural land;

– forests;

– development land;

– any other land or property which is not used, or suitable for use, as a dwelling; and

– six or more dwellings acquired in a single transaction.

SDLT affects so many of us, as home buyers and sellers, as builders, as developers or investors in property, as agricultural landowners and as businesses renting premises in the commercial property market.

SDLT generates a significant amount of revenue in Wales and the UK. The latest HMRC estimates for SDLT in 2013-14 show UK revenues of £9.3 billion and Welsh revenues of £145 million. In 2013-14, non-residential transactions generated £60m of SDLT in Wales.

 The Wales Act 2014 (“the Act”) enables the Welsh Government to legislate about devolved taxation, specifically SDLT and landfill tax. The Act confers powers on the Assembly to replace SDLT with a Welsh tax on transactions involving interests in land.

 On 10 February 2015, the Welsh Government published proposals for a land transaction tax (LTT) to replace SDLT in Wales from April 2018. Comments are invited by 6th May 2015 on a number of issues. Comments are invited on the following questions in relation to non-residential transactions:

  • How important is it to have consistency between the tax regimes in Wales and England for non-residential property transactions? Please provide practical examples to support your answers.

 

– If consistency is important, what key elements need to be consistent? e.g. tax structure (marginal or slab, rates and bands, how transactions are taxed)?

  • Does a slab structure create distortions in the non-residential property market? Please provide practical examples to support your answers.

 

– If so, would a marginal rate be an improvement on this? Please give details.

  • What would be the key impacts on the non-residential market in Wales of having a different transaction tax regime from England?

A decision on the rates and bands of LTT will be made by the Welsh Government much closer to the date when SDLT is devolved to Wales in April 2018.

Provision is also made in the Wales Act 2014 for the disapplication of Landfill Tax in Wales and for it to be replaced by a Welsh tax on waste disposed to landfill. A Consultation on proposals for a replacement tax on waste disposed to landfill in Wales will be launched shortly.

The Welsh Government appears keen to maintain consistency with the current SDLT regime in England and Wales. Therefore, many of its proposals replicate SDLT measures. However, it is also keen to tailor LTT to the Welsh property market and where possible, to create a better regime for Wales than SDLT.

To have your say on the future of LTT in Wales, please go to:

http://wales.gov.uk/consultations/finance/land-transaction-tax/?lang=en

Please ensure that you respond before the 6th May 2015.

For advice on SDLT or any other matter relation to commercial or agricultural property transactions, please contact Lucy Morris on tel. 01267 239 018 or by email lucy.morris@redkitelaw.co.uk

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

What our clients say

I was very pleased with the courtesy of the ladies who attended to my requests and particularly so at the time when I had my accident – they were extremely helpful.

Paul James' support has been invaluable in effectively progressing key contractual requirements. His knowledge and expertise in contract and procurement matters is exceptional. Would not hesitate to engage Paul's services again in future should the requirement and opportunity arise.” (dated March 2017).

The reason I used Redkite is that most solicitors don’t have the area of expertise that I required.

Redkite have provided assistance through several particularly difficult issues. Their advice has been professional, thorough and specifically tailoured to the needs of our business. The staff are approachable, knowledgeable and realistic in the advice they provide.

Redkite were recommended to me and I would do the same, fantastic service.

I have to say that everyone I have come into contact with from the receptionists to the solicitors have always been excellent. The advice I have been given formally and informally has always been clear and concise which is always a weight off your mind when you are dealing with the affairs of your loved ones.