The Welsh Government has been granted powers which will allow it to vary income tax rates from 2019 under a new fiscal framework. The new devolution rules will apply to stamp duty land tax, landfill tax and Welsh rates of income tax, allowing the Welsh Government to fix rates for the first time.
The Welsh Government has already been granted powers over stamp duty - to be replaced by a Land Transaction Tax (LTT) which will take effect in April 2018.
Like SDLT, LTT will be payable when you buy or lease a building or land over a certain price. It may affect house buyers and sellers and businesses including builders, property developers and agents involved in the transaction process (such as solicitors and conveyancers). Decisions on the new tax rates will be made closer to April 2018 to ‘reflect economic conditions at that time’.
The research paper ‘Land Transaction Tax: Setting rates and bands’ outlines some of the issues in setting the rates and bands for LTT in Wales.
The paper states that SDLT receipts depend on transaction volumes and property prices, which can both vary substantially from year to year and with the economic cycle. This makes SDLT a volatile revenue stream. There was a sharp fall in revenues in Wales during the recession; from £236m in 2006-07 to £100m in 2009-10.