It may feel like we’re living in increasingly uncertain times ever since the UK voted to leave the EU.
That centred on most of the electorate’s desire to obtain more devolved powers from Brussels, but in reality devolution has been going on a lot closer to home for decades.
Back in September 1997, Scotland and Wales held referendums to transfer certain powers from central government to the regions, while Northern Ireland followed suit a year later.
While these devolution deals saw the creation of the Scottish parliament, the national assembly for Wales and the Northern Ireland assembly, many of the powers to raise certain taxes have either recently come into force or are due to take effect in 2018.
Wales is in line to collect its first national tax in almost 800 years from April 2018 when it replaces stamp duty land tax with its own devolved land transaction tax (LTT).
Land transaction tax
The current tax-free stamp duty threshold on most residential transactions stands at £125,000 until the end of 2017/18.
LTT will replace stamp duty in Wales from 1 April 2018, with the tax-free threshold originally being £150,000. An extra 3% is charged on the purchase of all additional residential properties in Wales.
That decision was made before chancellor Philip Hammond abolished stamp duty for first-time buyers on properties worth up to £300,000 in Autumn Budget 2017.
This meant first-time buyers in Wales can only take advantage of the Westminster policy for around three months before the devolved LTT takes effect.
However, in response to Hammond’s Budget measure, the Welsh Assembly’s finance secretary Mark Drakeford raised the LTT threshold to £180,000 for all homebuyers – not just first-time buyers.
From 1 April 2018, homebuyers in Wales will only pay various rates of LTT if they fall into the following thresholds:
- £180,000 to £250,000 – 3.5%
- £250,001 to £400,000 – 5%
- £400,001 to £750,000 – 7.5%
- £750,001 to £1 million – 10%
- above £1 million – 12.5%.
Wales will assume responsibility for partially setting its own income tax rates from April 2019 as part of a devolution deal with the UK treasury, which was announced in July 2017.
The powers allow assembly ministers to cut or raise income tax rates by 10p in each band – and will no longer require a referendum to introduce.
However, the Senedd will not raise income tax rates in Wales for the remainder of the current assembly, which is due to continue until May 2021.
Until April 2019, income tax thresholds in Wales will continue to adopt the following UK rates and bands:
|Taxable income 2017/18||Taxable income 2018/19||Tax rate|
|Basic rate||£11,501 to £45,000||£11,851 to £46,350||20%|
|Higher rate||£45,001 to £150,000||£46,351 to £150,000||40%|
|Additional rate||Above £150,000||Above £150,000||
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