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Wales raises stamp duty on properties worth more than £345,000

stamp duty
stamp duty

The majority of home buyers in Wales will pay no stamp duty after an overhaul of the tax, but those purchasing more expensive properties will pay hundreds of pounds more.

The Welsh Government will increase the nil-rate threshold for land transaction tax, the country’s equivalent of stamp duty, from £180,000 to £225,000 after it was changed in England and Northern Ireland in the mini-Budget.

Anyone buying a property below this threshold will pay no tax, while those purchasing a home worth less than £345,000 will benefit from tax savings of up to £1,575.

The Welsh Government has estimated the reforms will spare 61pc of buyers from paying any tax on their purchase. None of the changes apply to second homes, and it will come into effect on October 10.

But anyone buying a home worth more than £345,000 will be hit with a “small tax increase”, it confirmed.

The current system imposes a 3.5pc tax on the proportion of the property’s price that falls between £180,000 and £250,000, and a 5pc charge on the value between £250,000 and £400,000. But after October 10, the tax on the property price that is between £225,000 and £400,000 will rise to 6pc.

The Welsh Government said buyers purchasing homes worth more than £345,000 would be hit with a tax rise of up to £550.

It has made assurances that taxpayers who exchanged contracts before the new rules come into force will be protected from any tax increase.

It follows a similar shake-up of the stamp duty system in England and Northern Ireland by Chancellor Kwasi Kwarteng last week. Westminster said it would give Scotland and Wales funding for similar property tax cuts to “allocate as they see fit”. The Welsh Government said it had already been considering making changes to land transaction tax in its Budget later this year, but had accelerated the reforms to give “clarity to the housing market”.

Rebecca Evans, Wales’ minister for finance and local government, said the change was tailored to the “unique needs of the housing market” in the country. She added: “These changes will get support to people who need it and help with the impact of rising interest rates.”

In his mini-Budget on Friday Mr Kwarteng increased the nil-rate stamp duty threshold on residential properties from £125,000 to £250,000 with immediate effect in England and Northern Ireland, with a saving of up to £2,500 for homemovers.

The threshold at which first-time buyers start paying stamp duty has also risen from £300,000 to £425,000 and they are now entitled to tax relief on purchases worth up to £625,000, up from the previous cap of £500,000.