Land Transaction Tax statistics: April to June 2019

From 1 April 2018, LTT replaced Stamp Duty Land Tax (SDLT) on residential and non-residential property and land interests purchased in Wales. The tax rates and tax bands for LTT vary depending on the type of transaction.  

LTT statistics are not fully comparable to previous SDLT statistics because different rates and bands are used in LTT. The reliefs may also be different for the two taxes (for example, first time buyers’ relief applies to SDLT, but not to LTT).  

All of the data used in this statistical release is available in a spreadsheet on the summary statistics page. New detailed datasets for Land Transaction Tax were published on the StatsWales website in June. This includes annual data by local authority, Assembly Constituency and using the Welsh Index of Multiple Deprivation. 

The diagram on the key quality information page explains the timing of LTT statistics. Estimates presented for June 2019 and the quarter April to June 2019 are provisional. Revised estimates are presented for earlier periods. The provisional data will be revised in future, as not all tax returns for these periods may yet have been received.  

Statistics for earlier periods may continue to be revised in future, to account for any amendments to transactions. In particular, this will be due to higher rate refunds being made for several years after the date of the original transaction. 

Users should refer to the separate glossary and key quality information while reading this statistical release. Relevant terms are defined in the glossary as they are used in the release. The key quality information page describes how Land Transaction Tax statistics meet the Code of Practice for Statistics and the dimensions of value, trustworthiness and quality. 

These statistics relate to transactions which were effective in particular month, quarter or year. A property or piece of land may have been sold more than once in that time, and if so, would feature multiple times in the statistics. For example in 2018-19, our best estimate is that between 3.5% and 4% of transactions involved a piece of land or property which has been sold more than once in the year. 

The following symbols are used in this release:

r     This value has been revised in this publication
p    This value is provisional and will be revised in a future publication

Figure 2.1  Number of reported notifiable transactions, by effective date [1]

• At the close of 15 July 2019, there were 14,500 reported notifiable transactions with an effective date for April to June 2019, with a small number of further notifications likely to be received.
   
• In April to June 2019, 90% of transactions were residential and 10% were non-residential, similar percentages to previous quarters.

Figure 2.2  Tax due on reported notifiable transactions, by effective date [1]

• At the close of 15 July 2019, £47.8 million tax was due for transactions with an effective date for April to June 2019. This includes £10.4 million in tax due for non-residential transactions, the lowest quarterly value seen to date.
   
• There can be seasonal effects in the levels of transactions and tax due. Therefore it can helpful to make comparisons of April to June 2019 data with the same period in 2018. Comparing April to June 2019 data with the same period in 2018, a fall in non-residential tax due was offset by a rise in residential tax due, resulting in very little difference in the overall figure.
   
• The tax due for 2018-19 was £226.6 million. This has been revised marginally downwards since our previous publication in June 2019 when the figure was £226.9 million. This decrease is due to higher rate refunds being paid out in the past month (for higher rates transactions which were effective during 2018-19).

Figure 2.3  Value attributed to properties subject to LTT, by effective date [1]

• The value of property taxed in April to June 2019 was £2.7 billion, slightly lower than in the same period in 2018.
   
• Separately, the rental value for newly granted non-residential leases was £213 million in April to June 2019 and £1,284 million for 2018-19.
   
• This latter figure for 2018-19 has been revised upwards (from £693 million) since our previous publication in June 2019. This is due to a better estimate of rental value now being available. Previously, the rental value was unavailable on a portion of returns submitted by taxpayers for 2018-19 due to the way in which certain types of transactions are processed by the WRA’s tax system. However, these values have now been calculated by the WRA using other data on the returns, forming part of the revised figures for 2018-19. We will continue to apply this method in future.

Figure 2.4  Number of reported notifiable transactions, by month transaction was effective

• The numbers of transactions by effective month has varied greatly since April 2018. Higher numbers were generally seen in the second half of 2018, peaking in November 2018. This was partially due to there being five Fridays in November 2018 (Figure 10.8 in section 10 of our annual statistical release shows that nearly half of transactions have an effective date that is a Friday).
   
• In March 2019, there was an increase from the previous month in non-residential transactions. This may be expected, as it is common for non-residential leases to be renewed at the end of the financial year.
   
• The monthly numbers of transactions in April to June 2019 were at a broadly similar level to the same period in 2018.

Figure 2.5  Tax due on reported notifiable transactions, by effective month

• As may be expected, similar trends are seen in the monthly tax due as are seen in the monthly counts of transactions.
   
• However, there is greater volatility in this comparison when considering only non-residential transactions.
   
• The tax due for non-residential transactions also makes up a larger share of total tax due than the share of the number of transactions. The same is true for the additional revenue from higher rates residential transactions.

Figure 2.6  Transactions by transaction type, April to June 2019

• The valuation of the properties associated with conveyances and transfer of ownership during April to June 2019 was £2.5 billion (not shown in Figure 2.6).
   
• Conveyance or transfer of ownership accounted for most of reported notifiable transactions in April to June 2019. This figure was 94% for residential transactions and 70% for non-residential transactions.
   
• A new lease was granted in 26% of non-residential transactions (compared with 2% of residential transactions).
   
• Similar percentages are also seen for the four quarterly periods in 2018-19.

Figure 3.1  Number of residential transactions, by residential tax band and quarter the transaction was effective

Figure 3.2  Tax due on residential transactions, by residential tax band and quarter the transaction was effective

• Figures 3.1 and 3.2 show the quarterly trends for each tax band, in the number of residential transactions and tax due. There are six residential tax bands and the largest three bands have been combined here to show results for properties with a purchase price of greater than £400,000.
   
• Similar trends for the tax bands can be seen in both numbers of transactions and tax due. Most of the tax bands show a peak in transactions and tax due during October to December 2018.
   
• However, there is greater volatility in the trends when considering the tax due on properties in the higher value bands.

Figure 3.3  Number of residential transactions and tax due on those properties, by residential tax band, April to June 2019

• Nearly two thirds of residential transactions were within the first tax band (purchase price £180,000 or lower). Although the main tax rate on residential transactions of up to £180,000 is 0%, these transactions still accounted for nearly a fifth of total residential tax due, which relates to the higher rates residential component of the tax.
   
• Combining the fourth, fifth and sixth bands (purchase price of greater than £400,000), these accounted for only 4% of transactions. However, the tax due for these transactions accounted for 30% of the total residential tax due.

Figure 4.1  Number of non-residential transactions, by value and effective date [1]

Figure 4.2  Tax due on non-residential transactions, by value and effective date [1]

• Figures 4.1 and 4.2 show that there were 1,400 reported notifiable non-residential transactions effective in April to June 2019 with £10.4 million tax due.
   
• In each three-month period since April 2018, over half the tax due has been contributed by transactions with a non-rental value great than £1 million. In each three-month period, between 10% and 20% of the tax due has been contributed by the rental value of non-residential properties.

Figure 4.3  Number of non-residential transactions, by value, April to June 2019

Figure 4.4  Tax due on non-residential transactions, by value, April to June 2019

• Figure 4.3 shows that in April to June 2019, 4% of non-residential transactions had a non-rental value of more than £1 million, while these transactions accounted for 54% of the non-residential tax due (Figure 4.4).
   
• Figure 4.3 also shows that for nearly a quarter of non-residential transactions, a rental value was associated with the property (which contributed to the tax paid on the transaction).
   
• The rental value of non-residential properties accounted for nearly a fifth of the total non-residential tax due (Figure 4.4).

Reliefs can be claimed on both residential and non-residential properties. Reliefs reduce the amount of tax due when certain conditions are met. Multiple reliefs can be applied to a single transaction and reliefs may reduce the tax due to zero (known as a full relief) or by a certain percentage or amount (known as a partial relief).

Figure 5.1  Number of transactions relieved, by quarter the transaction was effective [1]

• Figure 5.1 shows that there were 280 non-linked transactions in April to June 2019 with reliefs applied to them that reduced the associated tax due.
   
• On average, there are around 100 reliefs claimed in each three-month period which had no impact on the tax due, and these are excluded from Figure 5.1. Many of them have been reported unnecessarily by the organisations completing the tax return. As an example, some of these apply to low value residential transactions. Indications are that they are due to a perceived but mistaken need to claim first time buyer relief (which applies for the predecessor tax, but not to LTT). This is known following queries raised with several agents asking why tax reliefs have been claimed where there is no impact on value of the tax. Further information about this category of reliefs is provided in Example 4 in our key quality information.
   
• This example also describes some adjustments that have been made to more correctly identify the value of tax relieved associated with these transactions. Further adjustments are expected in future; and we therefore expect to revise this final item in Figure 5.1 in future.

Figure 5.2  Tax relieved, by quarter the transaction was effective [1]

• Figure 5.2 shows that in April to June 2019, the total value of reliefs claimed for non-linked transactions was £4.7 million. This is substantially lower than in any previous three-month period since April 2018.
   
• For each three-month period since April to June 2018, there have been higher numbers of reliefs claimed on residential transactions than for non-residential transactions. However, the total value of reliefs claimed has generally been larger for non-residential transactions than for residential transactions (except for April to June 2019).

Figure 6.1  Number and value of refunds of higher rate residential issued, by effective date [1]

When a refund for higher rates residential LTT is claimed, the original transaction is amended to a main rate residential LTT transaction. The data in this release is adjusted for any refunds approved by WRA up to and including 15 July 2019.

Figure 6.1 shows that 950 higher rate refunds were claimed for transactions with an effective date in 2018-19, with £7.3 million refunded to taxpayers. These values have been revised upwards since our previous publication in June 2019.

With up to three years for taxpayers to sell their previous main residence and claim a refund, this data for 2018-19 will continue to be revised upwards in future editions of our statistics (with a consequent reduction in the total tax due shown in other tables).

The number and value of refunds presented for April to June 2019 are lower than for earlier periods. This is because compared with earlier periods, insufficient time has passed since the transaction was effective for many of the relevant taxpayers to sell their previous main residence and claim their refund.

For all higher rates transactions, the WRA asks the question whether the taxpayer intends to reclaim the higher rates element in future. While it will take several years before we know how likely someone is to claim based on their stated intentions (it can take up to three years to make the claim), we do currently know that around 70% of those who do claim answer this question in the positive.

Additional data on higher rate refunds

Another useful way of presenting data on higher rates refunds is to use the date when the refund was approved by the WRA. A dataset using these dates, and also the effective date of the original transaction, can be found on the StatsWales website.  

Further information on the refund payments made to taxpayers, by the month in which they were made, can be found in Table 6a of our monthly and quarterly statistics. 

These additional data are provided, in the main, to support forecasting requirements.

Figure 7.1  Land Transaction Tax (LTT) paid to the Welsh Revenue Authority (WRA)

• In 2018-19, the WRA received £220.2 million in LTT payments.  These figures are less than those reported in Figure 2.2 as they relate to the payments actually received in each month (often referred to as ‘on a cash basis’), as opposed to the amounts due on transactions that were effective in the month.
   
• In particular, there is a difference in April 2018, as the WRA only started collecting the tax in that month. Therefore, no payments relating to transactions effective in earlier months were relevant.
   
• After April 2018, receipts generally increased to August 2018, followed by a period of relative stability until February 2019 which saw the lowest figure since April 2018. Monthly receipts then rose into March 2019 but have fallen slightly since, with the data for June 2019 similar to that for June 2018.

This annex looks at the effect of the regular revisions made to Land Transaction Tax statistics. The differences between the first, second and third estimates published for a particular month are analysed here, for both the number of transactions and the tax due. For example, three estimates for April 2019 have been published. We published the first estimate on 24 May 2019, published the second estimate on 27 June 2019 and the third estimate on 25 July 2019.

Figure A1  Percentage change between the first and second estimates, by month transaction was effective

Figure A1 shows that higher levels of revisions can generally be seen in the earlier months that the WRA began collecting LTT. This is particularly the case for the tax due for transactions with an effective date in April 2018, where there was a 30% increase in the estimate of tax due (from the first to the second estimate for the month). A larger revision in April was expected because the familiarity of the system to users would have been lower, and also because an earlier cut-off date in the following month was used to extract the data. Nevertheless, the 30% figure in terms of tax due is considerably higher than the equivalent figure for the number of transactions (10%). It is explained by a few larger transactions with an effective date late in April that were not reported to WRA until later in May (before the 30 day filing limit, but after the cut-off date for the April publication).

Figure A1 also shows the levels of revisions have generally decreased over time. Since October 2018, the revisions between the first and second monthly estimates have generally been between 0 and 3%. This is likely to be due in part to an increasing familiarity with the system amongst solicitors and conveyancers completing the returns, and is consistent with a general decrease in the time taken for returns to be filed with the WRA over the same period (not shown in tables or charts).

There may also be seasonal effects in the data. For example, higher revisions were seen for the July 2018 estimates than the months around it. However, we will require at least another year’s worth of data to properly assess any data seasonality.

A downward revision was made to the non-residential tax due for April 2019 (between the first and second estimates). A non-residential transaction effective in April 2019 was incorrectly entered as being large and was later revised.

Revisions between second and third published estimates

In a spreadsheet published alongside our monthly and quarterly statistics, Tables 1 and 2 show the difference between first, second and third published estimates for a month.

Relatively small increases are seen between the second and third estimates for a month. In general, this is also the case for the later estimates for a month (not shown in the tables). However, falls may be seen in the second, third and later estimates of tax due for a particular month. This is because the data are shown net of any refunds for higher rate residential transactions. These refunds may be claimed several years after the effective date of the original transaction, and are analysed in the main LTT statistical release which is published alongside this Annex.

In future, we may consider applying a grossing factor to the first estimates for a particular month. This may help reduce the revisions required to the first estimate for a month. With the volatility shown in the data to date, it is likely we will need several years of LTT data in order to calculate appropriate grossing factors.

In general, larger revisions are seen in the data on non-residential transactions than for residential transactions. This reflects the more volatile nature and often larger size of non-residential transactions.

Summary statistics

Key quality information

Glossary