Following a vote in the Welsh Assembly, Wales is set to receive new tax powers from Westminster, meaning that for the first time in over 800 years, Wales will set its own tax.
Although no one is quite sure what Welsh tax systems looked like 800 years ago, the Wales Bill (the legislation that grants the powers) will give Wales the power to set its own rates on multiple taxes, including Stamp Duty and Income Tax.
For landlords looking to buy property in Wales, this could mean a different set of taxation rules compared to what you may be custom to in England (Scotland already has this power).
Firstly, Stamp Duty Land Tax will be known in Wales as Land Transaction Tax. In effect Land Transaction Tax will be known as the Welsh Stamp Duty, but changing the name helps avoid a potential clash.
The name change also means that we can say Wales will not have Stamp Duty Land Tax.
Land Transaction Tax will however implement most of the same costs and charges as its predecessor, including the additional 3% levy on second homes and buy-to-let.
The Welsh Government is keen to avoid as much confusion and difficulty as possible, by keeping the new Land Transaction Tax as close to the old Stamp Duty rules as possible.
The Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Bill (LTT Bill for short) is the Welsh legislation that contains the new Land Transaction Tax, and is currently working its way through the Welsh Assembly.
This will need to be passed by the Welsh Assembly before the new system comes into force, likely in 2018.
At the same time, Westminster is finishing off the passage of the Wales Bill, which gives Wales the power to implement the LTT Bill, among a number of other powers.
The RLA has been arguing that, under the new LTT Bill, exemptions should be made to the additional 3% levy on buy-to-let homes. Creating a series of these exemptions would allow the Welsh Assembly to take a tax, initially designed in Westminster, and make it work for Wales.
Although some complexities exist around funding formulas and the deemed amount that the additional levy would bring to the Welsh Treasury, creating exemptions could be a way to stimulate growth and increase housing supply in key areas, at a relatively low and controlled cost.
As the LTT Bill continues to work its way through the Welsh Assembly, the RLA will continue to make these arguments.
Let us hear your views on Wales’ new powers and Land Transaction Tax in the comments section below.