People buying homes in Wales for less than £225,000 will pay no tax from October

People buying homes in Wales for less than £225,000 will pay no tax, under new measures announced by the Finance Minister.

The move comes after new Chancellor Kwasi Kwarteng slashed stamp duty for home buyers in England and Northern Ireland as part of a range of tax cuts.

The Stamp Duty threshold will rise from £125,000 to £250,000 for house buyers in England and Northern Ireland.

He said the move will take 200,000 people out of paying stamp duty altogether.

The cut to Stamp Duty in England and Northern Ireland means the Welsh Government will receive around £70 million over the three-year 2021 Spending Review period.

The stamp duty system is devolved in Wales and is known as Land Transaction Tax.

In Wales, the new threshold for paying Land Transaction Tax is being increased from £180,000 and the change will come into force from 10 October.

The Welsh government has said there will also be an increase in the rate of Land Transaction Tax for homes that cost more than £345,000.

“The move is intended to ensure that the threshold for paying tax reflects the rise in prices of homes over the last two years.”

People buying homes under £225,000 will not pay any Land Transaction Tax.

The Welsh government said that anyone buying a home costing less than £345,000 “will see a reduction in the tax they pay, up to a maximum of £1,575.”

People buying homes worth more than £345,000 will see an increase – up to £550 – ”but these only represent around 15% of property transactions in Wales.”

All other elements of Land Transaction Tax will remain unchanged, meaning there are no tax reductions provided to those purchasing second homes in Wales, unlike with stamp duty land tax in England.

Rebecca Evans, Minister for Finance and Local Government, said:

“This is a change tailored to the unique needs of the housing market in Wales and contributes to our wider vision of a fairer tax system. 61% of homebuyers will not pay tax on their purchase.”

“These changes will get support to people who need it and help with the impact of rising interest rates.”

“We also know that helping people at the lower end of the market will have a particular benefit for first time buyers.”

“We help people buy their first home in a number of different ways, including shared ownership and help to buy schemes, and I am pleased to be able to extend that support through these changes to Land Transaction Tax.”

The changes have been brought forward as a result of changes to stamp duty land tax  – paid in England and Northern Ireland – announced by the UK Government in last week’s financial statement.

The Welsh Government was considering making changes at its Budget later this year, but says it is making changes now to “give clarity to the housing market.”

Welsh Conservative Shadow Minister for Finance, Peter Fox MS said: “Last week the UK Conservative Government took bold and decisive action to put aspiration, opportunity and growth at the heart of the economy.”

“As part of that the Labour Government will receive £70 million following changes to stamp duty in England.”

“While this tax cut for home buyers in Wales is welcome – something we’ve been calling for nearly a decade – it simply does not go far enough.”

“House prices in Wales have now hit £240,000, yet the Labour Government in Cardiff Bay is firmly slamming the door in the faces of first-time buyers by refusing to provide specific support for them.”

“It is simply astounding that Labour and Plaid Cymru can justify spending £100 million on more politicians in Cardiff Bay and not supporting people onto the housing ladder.”

“Labour need to stop holding back money and provide the tax cuts that Wales needs to boost growth and support hardworking families and businesses.”