The Welsh consultation offers lessons for HMRC on SDLT.
With so much attention being paid to the upcoming Budget on 26 November, it would be easy to overlook the consultation issued on 3 November 2025 by the Welsh Government and the Welsh Revenue Authority (WRA) on legislative proposals relating to the Welsh taxes. They are looking for responses by 26 January 2026. A few points relating to Land Transaction Tax (LTT) caught my eye.
When I was featured in Tax Journal’s ‘One minute with’ (7 November 2025), a question I addressed was ‘If you could make one change to tax, what would it be?’ My answer was about leases granted to or by trustees/nominees. SDLT and LTT rules intending to counter avoidance can cause problems with relieving provisions, such as for sales and leasebacks and for lease surrenders and regrants where leases are granted to or by trustees/nominees.
By coincidence, the consultation paper addresses the issue at section 15. Under the heading ‘nominees and leases’ it proposes amending the Welsh legislation to ensure that the availability of reliefs is not restricted by the special rules about leases granted to or by nominees. Let us hope that HMRC follow suit and look again at the equivalent SDLT rules.
The consultation covers another pet issue of mine. If A alone owns a property and transfers a share to B, so A and B jointly own it, who is the ‘purchaser’ for SDLT/LTT? It seems logical to me that it is B alone. HMRC take the view that, for SDLT, it is A and B (see their guidance on first time buyers’ relief at SDLTM29845). The consultation deals with this at section 13 and says: ‘In order to provide clarity and increase the fairness of the tax we propose introducing a provision into LTTA to clarify that, in an A to A+B transaction, A is not to be treated as a buyer.’ They point out that in the context of LTT this can be relevant for establishing whether the higher rates apply.
LTT is a self-assessed tax and the LTT legislation requires the WRA to operate a ‘process first, check later’ principle. That means that the WRA process repayments following an amendment to a return, even when opening an enquiry and even when they consider the amendment to be at high risk of being incorrect. They have been able to invite taxpayers to allow WRA to retain the money as a payment on account rather than refunding it, but had no power to withhold repayment in the absence of agreement. I believe that the WRA have been more successful than HMRC in tackling ‘dodgy’ amendment claims by being more willing, from an early date, to spot risk areas and to open enquiries. For example, I understand they were not hit by such a wave of amendments based on properties being ‘uninhabitable’, unlike HMRC, who appear to have reacted more slowly. The proposal is to allow the WRA power to withhold repayments during an enquiry. They say that this will address taxpayer concerns around money being refunded and then recharged with interest. It will also address collection difficulties which can arise for the WRA.
A change to group relief is proposed dealing with the rules concerning consideration provided from outside of the group. They give an example of a case involving a director’s loan which is assigned between the group companies. They say they want to make it clear that this should not cause group relief to be lost, unless the transaction is part of a scheme to save LTT.
Changes are proposed to the rules for the higher rates of LTT, so that they provide for the standard residential rates to apply on collective enfranchisement, not the higher rates.
There is a proposal to give the WRA power to issue information notices, to check whether a relief has been withdrawn. The example is given for the LTT relief for freeports (special tax sites) where relief can be withdrawn if during the ‘control period’ the land is not used exclusively in a qualifying manner. The powers of the WRA at present are limited to opening an enquiry (this usually has to be within 12 months from the filing date) or to make an assessment after the enquiry window has closed. An assessment would be difficult for WRA without the necessary information. The new power to issue information notices is intended to plug that gap.
Another proposed change is to increase the rate of interest on late tax in line with that now charged by HMRC (so it would be 4% over Bank of England base rate rather than present 2.5% over base).
Home >Articles > Welsh Government consults on LTT and other tax changes
Welsh Government consults on LTT and other tax changes
The Welsh consultation offers lessons for HMRC on SDLT.
With so much attention being paid to the upcoming Budget on 26 November, it would be easy to overlook the consultation issued on 3 November 2025 by the Welsh Government and the Welsh Revenue Authority (WRA) on legislative proposals relating to the Welsh taxes. They are looking for responses by 26 January 2026. A few points relating to Land Transaction Tax (LTT) caught my eye.
When I was featured in Tax Journal’s ‘One minute with’ (7 November 2025), a question I addressed was ‘If you could make one change to tax, what would it be?’ My answer was about leases granted to or by trustees/nominees. SDLT and LTT rules intending to counter avoidance can cause problems with relieving provisions, such as for sales and leasebacks and for lease surrenders and regrants where leases are granted to or by trustees/nominees.
By coincidence, the consultation paper addresses the issue at section 15. Under the heading ‘nominees and leases’ it proposes amending the Welsh legislation to ensure that the availability of reliefs is not restricted by the special rules about leases granted to or by nominees. Let us hope that HMRC follow suit and look again at the equivalent SDLT rules.
The consultation covers another pet issue of mine. If A alone owns a property and transfers a share to B, so A and B jointly own it, who is the ‘purchaser’ for SDLT/LTT? It seems logical to me that it is B alone. HMRC take the view that, for SDLT, it is A and B (see their guidance on first time buyers’ relief at SDLTM29845). The consultation deals with this at section 13 and says: ‘In order to provide clarity and increase the fairness of the tax we propose introducing a provision into LTTA to clarify that, in an A to A+B transaction, A is not to be treated as a buyer.’ They point out that in the context of LTT this can be relevant for establishing whether the higher rates apply.
LTT is a self-assessed tax and the LTT legislation requires the WRA to operate a ‘process first, check later’ principle. That means that the WRA process repayments following an amendment to a return, even when opening an enquiry and even when they consider the amendment to be at high risk of being incorrect. They have been able to invite taxpayers to allow WRA to retain the money as a payment on account rather than refunding it, but had no power to withhold repayment in the absence of agreement. I believe that the WRA have been more successful than HMRC in tackling ‘dodgy’ amendment claims by being more willing, from an early date, to spot risk areas and to open enquiries. For example, I understand they were not hit by such a wave of amendments based on properties being ‘uninhabitable’, unlike HMRC, who appear to have reacted more slowly. The proposal is to allow the WRA power to withhold repayments during an enquiry. They say that this will address taxpayer concerns around money being refunded and then recharged with interest. It will also address collection difficulties which can arise for the WRA.
A change to group relief is proposed dealing with the rules concerning consideration provided from outside of the group. They give an example of a case involving a director’s loan which is assigned between the group companies. They say they want to make it clear that this should not cause group relief to be lost, unless the transaction is part of a scheme to save LTT.
Changes are proposed to the rules for the higher rates of LTT, so that they provide for the standard residential rates to apply on collective enfranchisement, not the higher rates.
There is a proposal to give the WRA power to issue information notices, to check whether a relief has been withdrawn. The example is given for the LTT relief for freeports (special tax sites) where relief can be withdrawn if during the ‘control period’ the land is not used exclusively in a qualifying manner. The powers of the WRA at present are limited to opening an enquiry (this usually has to be within 12 months from the filing date) or to make an assessment after the enquiry window has closed. An assessment would be difficult for WRA without the necessary information. The new power to issue information notices is intended to plug that gap.
Another proposed change is to increase the rate of interest on late tax in line with that now charged by HMRC (so it would be 4% over Bank of England base rate rather than present 2.5% over base).
