Wales to introduce replacement to SDLT
In the first bill introduced as part of the new legislative programme brought forward by the Welsh government a new tax will be introduced to replace the Stamp Duty Land Tax currently in place to home buyers. The Land Tax and Anti-avoidance of Devolved Taxes (Wales) Bill has been designed to reflect needs and priorities unique to Wales and to improve efficiency and effectiveness.
Although the Land Transaction tax being introduced will be based on stamp duty land tax the bill has put a big focus on anti-avoidance with rules introduced to help prevent and robustly tackle tax avoidance, also some reliefs in relation to the demutualisation of insurance companies and building societies will not be reflected in the new bill. The 15% slab rate has been looked at and is thought to be irrelevant to Wales as it applies to considerations of greater than £500,000 being acquired by ‘non-natural’ persons such as companies. These rules have not been adopted. A rent element of new residential leases has also been added which will be exempt from tax under the LTT, this will simplify the tax and reduce administrative burden for practitioners. However, through regulations, Welsh Ministers will have the ability to make the rent element chargeable if required. Rules based around leases will be simplified to improve consistency of treatment of fixed term leases that continue after the term expires and leases for an indefinite term.
The bill is expected to receive Royal Assent in spring of next year with the devolved tax arrangements coming into action in April 2018. The rates have not yet been confirmed, this decision is thought to be left until a closer to 2018 to reflect the economic conditions at that time.
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