Finance Secretary Mark Drakeford today confirmed a higher rate of tax for additional residential properties will continue to be levied in Wales when stamp duty land tax is devolved in April 2018.
The higher rate for additional residential properties – currently 3% over the standard stamp duty land tax rates – is a new aspect of stamp duty land tax and came into force on 1 April this year. A similar rate also applies in Scotland.
The Office for Budget Responsibility (OBR) estimates the higher rate for additional residential properties will raise £9m in 2016-17 in Wales, rising to £14m in 2020-21. Retaining the higher rate will generate vital revenue to fund public services in Wales.
The Welsh Government carried out a technical consultation over the summer about how the higher rate could be adapted to make it better suited to Wales. A large number of suggestions were put forward, including calls to consider the impact and use of long-term empty properties to be bought back into use as affordable housing.
Following the technical consultation the Cabinet Secretary for Finance and Local Government has confirmed the higher rate will continue to be levied in Wales when land transaction tax replaces stamp duty land tax in April 2018.
To do this, government amendments will be brought forward at stage two of the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Bill, which is currently going through the National Assembly, to enable land transaction tax to include a higher rate levy for additional residential properties.
Professor Drakeford said:
“We have had an excellent response to the technical consultation about the higher rate of tax on purchases of additional residential properties and whether this should continue to apply in Wales when stamp duty is devolved in April 2018.
“There was a clear view from respondents about the importance of maintaining a single, consistent rate across the UK. I am today announcing that this levy will exist in Wales when land transaction tax – the successor to stamp duty in Wales – comes into force. The vital revenue generated will continue to help fund our valued public services.
“It is important we use the opportunity of tax devolution to consider whether changes can be made to improve efficiency, effectiveness and create a focus on Welsh needs and priorities.
"We will continue to explore the suggestions put forward by stakeholders about how this higher rate can be adapted through secondary legislation to meet Wales’ circumstances.”