People buying their main homes in Wales costing less than £250,000 will not pay any tax under temporary measures announced by finance minister Rebecca Evans on Tuesday.
The starting threshold for land transaction tax will increase from £180,000 to £250,000 for the residential main rates when from Monday 27 July to March 31, 2021.
Welsh Government says around 80% of homebuyers liable to the main rates of land transaction tax will not pay any tax and that this amounts to a tax reduction of £2,450 per transaction.
The changes are designed to reflect the nature of the housing market in Wales, where house prices on average are considerably lower [£162k] than in England [£248k]. For first time buyers the average price paid is £139,000 in Wales and £208,000 in England.
Unlike the cut in stamp duty announced in England earlier this month, the tax cut will not apply to purchases on additional properties including buy to let and second homes.
The finance minister added that savings made by adopting these temporary rates in Wales will release £30m in new funding to support the construction of new, energy efficient social housing in Wales.
Rebecca Evans said:
‘This tax holiday will help first time buyers as well as those selling to move on, but we are taking a different direction to support jobs and house building in Wales.
‘While eliminating taxes for those that need extra help, the tax holiday rate also reduces the tax paid on more expensive properties to help the wider housing market
‘Under these changes more than three quarters of homebuyers will pay no tax at all, an increase of 20 per cent under our current measures.
‘By setting these rates for Wales I am also able to confirm £30m to support the construction of new social housing and the much needed jobs they can deliver.’