Land Transaction Tax statistics: October to December 2019

These statistics are about LTT transactions that we (the WRA) have received by 20 January 2020.

For LTT transactions with an effective date in October to December 2019:

• 16,610 transactions and £68.4 million tax due. This is the highest first estimate of the quarterly value for tax due since LTT was introduced in April 2018. This is largely driven by higher revenues from residential transactions, when compared with the same period in 2018.
   
• 15,140 residential LTT transactions with £48.4 million tax due
  • of which, £18.7 million additional revenue was raised from the higher rates of the residential tax
     
• 1,480 non-residential LTT transactions resulting in £19.9 million tax due

These initial estimates for October to December 2019 are provisional. We will revise these estimates in the next statistics publication. This is because organisations are still able to report further transactions for December 2019. Organisations have 30 days after the date of the transaction to report them to the WRA.

Introduction of LTT

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. This is 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.

Value of LTT statistics

Timely information on activity in the property market is important for policy makers. When filing an LTT return about a property transaction, the organisation paying the return has 30 days after the effective date to submit and pay any tax due. LTT statistics therefore are relatively timely.

Forecasting LTT revenues for Wales in future is an important use of LTT statistics. The Welsh Government and the Office for Budget Responsibility mainly do this.

Data available for LTT

All of the data used in this statistical release is available in a spreadsheet on the headline statistics page.

In June 2019, we published new detailed datasets for LTT on the StatsWales website. This includes annual data by:

• Local authority
• Assembly Constituency (for residential transactions only)
• Level of deprivation, using the Welsh Index of Multiple Deprivation (for residential transactions only)
• Built up areas, published in October 2019 (for residential transactions only)

For data at the Wales level, we give links to the relevant StatsWales datasets throughout this release.

Timing of and revisions to LTT statistics

The diagram on the key quality information page explains the timing of LTT statistics. We present provisional estimates for December 2019 and the quarter October to December 2019. We present revised estimates for earlier periods. We will revise the provisional data in future. Not all tax returns for these periods may yet have been received.

In future, we may continue to revise statistics for earlier periods, 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.

Key quality information and glossary pages

Please see the separate glossary and key quality information while reading this statistical release:

• We define relevant terms in the glossary as they are used in this release.
• On the key quality information page, we describe how Land Transaction Tax statistics meet the Code of Practice for Statistics and the dimensions of value, trustworthiness and quality.

Properties or land sold more than once

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. If so, it 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.

LTT statistics by time period and transaction type on StatsWales

By the close of 20 January 2020, we received details of 16,610 notifiable transactions with an effective date in October to December 2019. In future, we expect to receive details of a small number of further transactions for this period.

In October to December 2019, 91% of transactions were residential and 9% were non-residential. These are similar percentages to previous three-month periods.

LTT statistics by time period and transaction type on StatsWales

By the close of 20 January 2020, £68.4 million tax was due for transactions with an effective date in October to December 2019.

There can be seasonal patterns in the property market, with higher levels of activity generally seen in the summer and autumn. These effects are also seen in the levels of transactions and tax due. Therefore, it can helpful to compare October to December 2019 data with the same period in 2018.

Comparing October to December 2019 data with the same period in 2018, there was a 7% increase in the overall figure for tax due, resulting in the highest quarterly value seen to date. This has been largely driven by increases in revenues from residential transactions.

However, in our monthly and quarterly statistics, we are gradually revising downwards the tax due for earlier periods. This is because of higher rate refunds being paid out in each month (for higher rates residential transactions which were effective in earlier periods, back to April 2018).

The October to December 2018 value will have already been subject to some of this downward revision, whereas the equivalent figure for 2019 will not yet. In future, there will be some upward revisions to the 2019 figure due to late transactions. Allowing for this, our best estimate of the change we expect to be see between the two periods is an approximate 3% increase.

LTT statistics by time period and transaction type on StatsWales

The value of property taxed in October to December 2019 was £3.4 billion. This was slightly lower than the same period in 2018.

Separately, the rental value for newly granted non-residential leases was £333 million in October to December 2019. This is higher than in the same period in 2018.

LTT statistics by time period and transaction type on StatsWales

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 number of transactions has been fairly stable in the second half of 2019.

LTT statistics by time period and transaction type on StatsWales

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.

The monthly amount of tax due seen in each of November and December 2019 is higher than in any previous month (based on first estimates).

Please note a small number of transactions effective in November 2019 with high reported tax are currently excluded. They are particularly dominant in relation to other transactions that month. We will include these transactions in future editions of these statistics, once we have done further work to assess their impact on the utility of the whole dataset.  

LTT statistics by transaction type and transaction description on StatsWales

The value of the properties associated with conveyances and transfer of ownership during October to December 2019 was £3.3 billion (not shown in Figure 2.6).

Most transactions in October to December 2019 were associated with a conveyance or a transfer of ownership. This figure was 94% for residential transactions and 69% for non-residential transactions.

A new lease was granted in just over a quarter of non-residential transactions (compared with 2% of residential transactions).

Similar percentages are seen for previous three-month periods.

LTT statistics by time period and residential transaction value on StatsWales

For each tax band, Figures 3.1 and 3.2 show the quarterly trends in the number of residential transactions and tax due. There are six residential tax bands. We have combined the largest three bands here to show results for properties purchased for more than £400,000.

Similar seasonal trends for the tax bands can be seen in both numbers of transactions and tax due. Most of the tax bands show a rise in transactions and tax due in October to December (compared with July to September). 

However, there is greater volatility in the trends when considering the tax due on properties in the higher value bands. For properties purchased for more than £400,000, the tax due in October to December 2019 was the highest quarterly value seen to date. This was also the case for properties purchased for between £250,000 and £400,000.

LTT statistics by time period and residential transaction value on StatsWales

Three fifths 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 around a seventh 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 5% of transactions. However, the tax due for these transactions accounted for 35% of the total residential tax due.

LTT statistics by time period and non-residential transaction value on StatsWales

Figures 4.1 and 4.2 show that there were 1,480 non-residential transactions effective in October to December 2019 with £19.9 million tax due. The value for July to September 2019 has also been revised upwards substantially since last published. This is due to a few late notifications accounting for a large amount of tax due.

In each three-month period since April 2018, around 50% to 70% of the tax due has been contributed by transactions with a non-rental value greater than £1 million. In each three-month period, around 10% to 30% of the tax due has been contributed by the rental value of non-residential properties.

Figure 4.3 shows that in October to December 2019, 6% of non-residential transactions had a non-rental value of more than £1 million. These transactions accounted for 68% of the non-residential tax due (Figure 4.4).

Figure 4.3 also shows that for 25% of non-residential transactions in this period, 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 14% of the total non-residential tax due (Figure 4.4).

Taxpayers can claim reliefs on both residential and non-residential transactions. Reliefs reduce the amount of tax due when certain conditions are met. More than one relief can be applied to a single transaction.

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

LTT statistics on reliefs by measure and transaction type on StatsWales

Figure 5.1 shows that there were 380 non-linked transactions in October to December 2019 with reliefs applied to them that reduced the associated tax due. This is the highest quarterly number seen to date.

On average, there are around 100 reliefs claimed in each three-month period which had no impact on the tax due. These reliefs 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. We expect further adjustments in future and we therefore expect to revise this final item in Figure 5.1 in future.

Before our next quarterly release, we intend to analyse the linked and relieved transactions further. Depending on the results, we hope to include some details about them in our figures 5.1 and 5.2.

LTT statistics on reliefs by measure and transaction type on StatsWales

Figure 5.2 shows that in October to December 2019, the total value of reliefs claimed for non-linked transactions was £10.0 million. This is less than the same three-month period in 2018.

For each three-month period since April to June 2018, the numbers of reliefs claimed on residential transactions was higher than for non-residential transactions. However, in each three-month period except one, non-residential transactions contributed most (around 70% to 90%) of the total value of reliefs claimed.

Further data on reliefs, including quarterly data by type of relief, is available on StatsWales at the link above.

LTT statistics on higher rate refunds by original transaction date on StatsWales

When a taxpayer claims a refund for higher rates residential LTT, 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 20 January 2020.

Figure 6.1 shows that 1,370 higher rate refunds were claimed for transactions effective in 2018-19, with £10.4 million refunded to taxpayers. These values have been revised upwards since our previous quarterly release in October 2019.

Taxpayers have up to three years to sell their previous main residence and claim a refund. Therefore, all the values in Figure 6.1 will continue to be revised upwards in future editions of our statistics. This will also to lead to the total tax due in other tables reducing.

The number and value of refunds presented for October to December 2019 are lower than for earlier periods. This is because compared with earlier periods, not enough 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. 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). But 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 the effective date of the original transaction, can be found on the StatsWales website at the link below:

LTT statistics on higher rate refunds by original transaction date and refund approved date on StatsWales

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.

In the main, these additional data are provided to support forecasting requirements.

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 received in each month (often referred to as ‘on a cash basis’). This differs from earlier tables in this release which are based on transactions that were effective in the month.

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.

The receipts of £30.6 million in December 2019 is the highest monthly figure seen to date.

We look here at the effect of the regular revisions made to Land Transaction Tax statistics. We analyse the differences between the first, second and third estimates published for a month. This is for both the number of transactions and the tax due.

For example, we have published three estimates for October 2019. We published the first estimate on 22 November 2019, published the second estimate on 20 December 2019 and the third estimate on 30 January 2020.

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%. Recent exceptions were:

• June 2019 when the tax due was revised up by 9% between the first and second estimate
   
• September 2019 (tax due was revised upwards by 16%)

These exceptions are generally due to a small number of returns arriving towards the end of the 30-day notification period.

The lower level of revisions generally seen now is likely to be due in part to an increasing familiarity with the system amongst solicitors and conveyancers completing the returns. It 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, we saw higher revisions for the July 2018 estimates than the months around it. However, we do not see any obvious seasonal patterns in data for 2019 so far. We will require at least another year’s worth of data to properly assess any data seasonality.

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

Revisions between second and third published estimates

In a spreadsheet published alongside this statistical release, Tables A1 and A2 show the difference between first, second and third published estimates for a month.

We see relatively small increases 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 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. We analyse refunds in section 6 of this statistical release.

In future, we may consider applying a grossing factor to the first estimates for a 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, we see larger revisions 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.

Our key quality information page describes how our Land Transaction Tax statistics meet the Code of Practice for Statistics and the dimensions of value, trustworthiness and quality.

We define relevant terms in the glossary as they are used in this release.

We would be grateful for your feedback on these statistics, to help us improve them. Please contact us using the details below.