HM Land Registry
Land Transaction Tax: the first Welsh tax for almost 800 years
In April this year, the Welsh Assembly replaced Stamp Duty Land Tax (SDLT) with a new Welsh tax.
About the author
Antoinette Jeremiah has worked in a variety of roles for HM Land Registry, including operational leadership, stakeholder management, and senior strategic account management focusing on channel management before assuming her role with product development within an Agile environment. She is committed to customer-centric solutions within the public service.
The new tax, called the Land Transaction Tax (LTT), is charged on property transactions which involve land located in Wales and is charged on the substance of a property transaction rather than the type of document which gives rise to the transaction.
HM Land Registry (HMLR) has worked alongside HM Revenue and Customs (HMRC) and the newly formed Welsh Revenue Authority (WRA) in a joint government initiative to ensure that the customer base and stakeholders were supported throughout the changes.
One of the interesting challenges presented by this project was how to deal with titles that sit across the English and Welsh border. Previously, the tax payable on cross-border titles was paid directly to HMRC, but as a result of the new legislation the tax on cross-border titles now needs to be proportioned between HMRC and the WRA. There are two situations where more than one tax may apply to a land transaction:
This is the purchase of a sole property that includes land on both sides of the England-Wales border, such as a field that sits across the border. Land that is on either side of the England-Wales border may be registered as a single HMLR title (a cross-title transaction) or as two or more titles.
Where two or more property interests in different UK tax jurisdictions are purchased for a single, agreed amount of consideration, either as a single transaction or several connected transactions, such as the purchase of a shop in Wales and in England. This will attract both LTT for the WRA as well as SDLT for HMRC on a proportional basis.
For both types of cross-border transaction, the total consideration must be divided, or apportioned, between the relevant transactions accordingly. The HMLR service MapSearch (accessed by e-business customers with a HMLR portal account) can be used to assist with identifying land.
It is straightforward to identify the border and the land on either side of most purchases involving land in more than one tax area. In fact, separate titles will already exist for the land in each area.
In the small number of cases where a single property title includes land on both sides of the England-Wales border, HMLR has a number of tools to help identify these.
Official copies of title can assist customers to identify these cases, and HMLR’s business customers are able to access the MapSearch service for free, which is available through the portal. The portal allows the user:
- to find out whether a property is registered;
- to view its location;
- to obtain the title number; and
- to see the registered proprietor of title.
Users can find where the border falls on those titles where it is not marked. This will then allow the taxpayer to work out which return(s) are needed. The service can also help work out the apportionment of consideration for the land in England and in Wales.
There can be transactions where the property title is a distance from the border and the border is not shown on the registered office copy title plan. To help find the border and the tax jurisdiction(s) where the land is located, you can use the following:
- evidence from the register of title;
- knowledge of UK geography (in particular, the border regions); and
- local authority searches from planning applications.
There is information at both GOV.UK and gov.wales regarding cross-border titles, and the circumstances surrounding these, in terms of assessing land tax payable.
At HMLR, we realised early on that close collaboration with our colleagues from HMRC and the WRA would be key to the success of this project. Our Swansea office hosted the team from the WRA and from HMRC for a day, experiencing all types of registration casework practices and processes.
The team experienced the techniques and skills required to both create a new register of title along with updating registers when properties are bought and sold. Sessions on mapping detail and creating the title plans to reflect the extent of the property were highlighted in relation to the England- Wales border titles.
The day really helped the WRA and HMRC see how the process of LTT fits into the registration process, and how joint working helps to make the processes work efficiently for customers. In addition, we also hosted an event for HMRC and the WRA to gain further insight into the registration process.
This also contributed to the development of the online guidance created by the WRA and HMRC, and the WRA has also produced a tax calculator to assist in working out the correct amounts to pay for LTT.
As well as the focus on joint government working along with market sectors and customers, HMLR also looked inwardly and set up staff focus groups, ensuring that our people could understand the changes and complete the applications for registration. This enabled the teams to coordinate across the activity, and each department gained insight to additional methods of working.
A range of levels of experience and operational roles took part, both in terms of customer-focused staff roles and technical caseworker roles, to give a complete view of the legislative changes and their impact.
HMLR has adapted its casework systems to accommodate the new tax evidence, and trained our people in the casework teams and support centres on the new practice. Throughout the changes, the project team wanted to ensure that both our people and the joint customer base were prepared in advance of the changes, and had pathways to ensure that our staff were up to date with the changes and how they would affect them.
We attended stakeholder events with the WRA and HMRC, and collaborated in a joint initiative to ensure that the customer base was ready to access the online taxes when the system went live. This unique approach resulted in consistency and further confidence that all parts of government were ready to receive LTT applications and certificates.
This work resulted in updates to our Practice Guides and external systems to accept the new tax forms from our customers when lodging registrations.
HM Land Registry has begun to receive the first registrations in the framework of the new legislation, and the transition has been smooth. This is the first time in 800 years that Wales has the ability to collect its own taxes and posed a very big change in the conveyancing world.
HMLR has played its part in ensuring that our systems were ready to accommodate the change, so our customers could continue to work with the new legislation with minimal disruption.
We are proud of the work we have undertaken to achieve this, and that pride extends, across the border, to our contribution to this successful cross-government initiative.
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