Welsh consult on stamp duty devolution

10 Feb 15

The Welsh government is consulting on a new land transaction tax for Wales, it has been announced. Finance minister Jane Hutt said this would be the first new tax to be levied in Wales for 800 years.

The Land Transaction Tax will replace UK Stamp Duty Land Tax from April 2018. It follows the 2012 report of the Silk Commission, which recommended that this tax be devolved to Wales.

Hutt said Welsh taxes needed to be fair to people and to businesses and should help support jobs and growth.

The consultation sets out several ways stamp duty could be reshaped to fit Welsh circumstances. Questions it asks include: whether current UK stamp duty rates are suitable for Wales; the impact on the housing market of introducing a separate tax regime to England; and whether current reliefs and exemptions should be retained.

‘Developments in Scotland, with their new Land and Buildings Transaction Tax, show us that a tax can be developed in the spirit of the tax it is designed to replace but still have some very different characteristics,’ Hutt said.

‘For example, the rates and bands of tax that are levied do not have to be the same.’

However, the Welsh consultation paper does not set out the property bands or the rates that might be applied. Hutt said these needed to be revealed much closer to implementation in order to stop them becoming outdated and unsuitable.

‘In Scotland, two sets of bands and rates have been announced and their tax is not even running yet,’ she said.

‘Therefore this is an issue that should not be decided now but during the next Assembly term.’

The Land Transaction Tax consultation is the second of three that will inform the devolution of some taxes to Wales.

Yesterday, Hutt updated the Welsh Assembly on the outcome of the first consultationon the collection and management of devolved taxes. She revealed there had been strong backing for the creation of a Welsh Revenue Authority and a Taxpayers’ Charter.

‘Another central element was our proposals to encouraging compliance and preventing and tackling tax avoidance,’ said Hutt.

‘We will now work to develop a Welsh tax avoidance rule.’

The consultation on Land Transaction Tax closes on May 6.

  • Vivienne Russell

    Vivienne Russell is managing editor of Public Finance magazine and publicfinance.co.uk

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