What is Land Transaction Tax (LTT)?

Key takeaways

• LTT doesn’t apply across the whole of the UK. LTT is used in Wales, while Stamp Duty applies in England and Northern Ireland

• LTT is a progressive tax system. LTT is charged in bands, meaning different portions of the purchase price are taxed at different rates depending on current thresholds

• Threshold and rates impact how much LTT is paid. No LTT is due on residential purchases up to £225,000 (for those without other properties); other tax rates should be checked for properties above this price

• There are higher rates for additional properties. Buyers who already own one or more properties may pay higher LTT rates

• Returns should be submitted within 30 days. An LTT return must be submitted within 30 days of completion, even if no tax is payable, and is often handled by a solicitor or conveyancer

What is LTT?

LTT replaced SDLT in Wales in April 2018. It applies to residential properties as well as non-residential land and property, such as shops. LTT is usually payable when buying property or land in Wales and is administered by the Welsh Revenue Authority (WRA), which collects and manages the tax on behalf of the Welsh government.

LTT vs SDLT: key differences

LTT and SDLT operate similarly but apply in different parts of the UK. LTT applies to property purchases in Wales, while SDLT applies in England and Northern Ireland. Differences can include:

• Different tax-free thresholds. For instance, no Stamp Duty is paid on properties up to £125,000. This differs if you are a first time buyer, but for LTT, the minimum threshold is higher at £225,000

• Different rates across price bands. There are differences in rates across both LTT and Stamp Duty. For the portion of £250,001 to £925,000, you would pay 5% Stamp Duty. For the standard rates of LTT, the portion over £225,000 (up to and including £400,000) would be 6%

• Differences in available reliefs. Stamp Duty offers relief for first time buyers for properties under £300,000; LTT does not

• Different administrators. LTT is administered by the WRA, while SDLT is managed by HMRC

You can find more information about Stamp Duty on the GOV.UK website.

How Land Transaction Tax works

Understanding how Land Transaction Tax works involves examining its structure. LTT is charged on a progressive, banded basis. This means different portions of the purchase price are taxed at different rates, depending on the LTT thresholds in place at the time of completion.

It can be helpful to check the current LTT rates and bands when calculating how much you owe. You will generally need to submit a LTT return after a purchase completes, even if no tax is due.

What are the current LTT thresholds?

As of June 2026, the current LTT thresholds for residential and non-residential properties are:

• £225,000 for residential properties (if you do not own other properties)

• £225,000 for non-residential land and property

You can use these thresholds to help you work out how much LTT you will be required to pay. For instance, for purchases of less than £225,000 completed on or after 10 October 2022, the main tax rates set your LTT at 0%.

How much LTT do you need to pay?

The amount of LTT you need to pay depends on factors such as the purchase price, the type of property and whether the buyer already owns another residential property.

What are the current LTT rates?

LTT rates are set by the Welsh Government and can change over time, but you must pay LTT if you buy a property or land over a certain price threshold. There are two types of LTT rates: main and higher.

Main residential LTT rates

Main residential LTT rates apply to those with no other residential property, whether freehold or leasehold. If your residential property is below the £225,000 threshold, you will not need to pay any LTT. If your property is over the threshold, this table outlines how LTT is calculated.*

*For transactions effective on or after 10th October 2022.

LTT for first time buyers

First time buyers in Wales do not currently receive a specific LTT relief. As a result, first time buyers are generally subject to main residential LTT rates, which are applied based on the purchase price of the property.

When do higher rates apply?

Higher residential tax rates may apply if you buy a residential property whilst you own one or more other residential properties. If you're changing your main residence, the higher rates may not apply; always check the correct guidance.

You’ll usually pay higher LTT rates when both of the following apply:

• You buy a residential property worth £40,000 or more

• You already own one or more other properties

If you hold a property on behalf of any children aged under 18, or you have an interest in a residential property as the beneficiary of a trust, this counts as a prior property and will likely mean you pay higher rates.

Higher residential LTT rates

If you are paying higher LTT rates, you will not receive tax relief. You can expect to pay a minimum of 5% on the portion up to and including £180,000.*

*Transactions effective on or after 11th December 2024

LTT for second homes and additional properties

Land Transaction Tax on second homes and additional properties is generally charged at higher rates. These higher rates may apply where a buyer already owns a residential property and is purchasing another, including buy to let properties or holiday homes. Whether the higher rates apply can depend on individual circumstances.

You can keep up to date with GOV.WALES rates and bands guidance.

Non-residential LTT rates

There are also different LTT rates for non-residential properties, including leasehold and freehold. This includes shops, offices and agricultural land.*

*Transactions effective on or after 22nd December 2020

How to calculate LTT

To help you calculate how much you need to pay, you can use an online LTT calculator to estimate the amount due. If you are buying a residential property, you’ll need to know whether the main rates or the higher rates of LTT apply. If you need to check whether a higher rate applies, you can use the GOV.WALES tool. Separate, higher rates may apply where the purchase involves an additional residential property. You may also need different calculations for claiming specific tax reliefs.

For more complex cases, or if you're uncertain how the tax applies, you may want to check with a solicitor or conveyancer or seek tax guidance from a registered professional, such as an accountant.

When and how to pay LTT

LTT is usually paid after a property purchase has been completed via an LTT return, which can be submitted to the WRA within 30 days of completion. A return must be submitted even if no tax is payable. In many cases, a conveyancer or solicitor submits the return and arranges payment as part of the conveyancing process, using funds provided by the buyer.

When does LTT not apply?

In Wales, you will not always be required to pay LTT. You usually won’t have to pay if:

• You have bought a property for less than £225,000 and you do not own any other property

• You have bought a property you intend to use as a second home for less than £40,000

• You have bought a derelict property that is unliveable – in this instance, you can claim an LTT refund

Some transactions may also qualify for LTT relief. Certain transactions, such as property transfers following a divorce or the dissolution of a civil partnership, may fall outside the scope of LTT relief. Relief may be available in specific circumstances, including multiple dwellings relief, subject to eligibility criteria.

It is always best to seek professional advice to check whether you are exempt from LTT payments or qualify for relief.

Explore our range of new homes across the UK, with offers like Bank of Family to help you move. Make sure to check our T&Cs to see if you’re eligible.

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Disclaimer:

This article is for general informational purposes only and does not constitute professional advice. Please speak with a mortgage, financial or legal adviser for more information regarding your specific circumstances.