In Wales the Land Transaction Tax (LTT) higher residential rates apply when an individual buys a dwelling for £40,000 or more and, at the end of the completion day, they or a spouse or civil partner they live with also own another dwelling worth £40,000 or more, unless they are replacing their main home. Companies pay them on almost any dwelling of £40,000 or more. If you buy a new main home before selling the old one, you pay the higher rates first and claim the difference back from the Welsh Revenue Authority (WRA) once the old home sells within 3 years.

When do the higher rates apply to an individual?

The rules are in Schedule 5 to the Land Transaction Tax and Anti avoidance of Devolved Taxes (Wales) Act 2017. The WRA’s technical guidance (LTTA/8020) sets out the conditions for an individual buying one dwelling:

  • the main subject matter is a major interest (freehold or a lease of 7 years or more) in a dwelling;
  • the chargeable consideration is £40,000 or more;
  • at the end of the day of the effective date, the buyer, any joint buyer, or a spouse or civil partner they live with, has a major interest in another dwelling worth £40,000 or more; and
  • the interest bought is not subject to a lease of more than 21 years to an unconnected person.

The other dwelling can be anywhere in the world, and holiday homes and furnished holiday lets count. Caravans, houseboats and mobile homes do not. Where two or more individuals buy together, the higher rates apply to the whole purchase if they would apply to any one of them. A spouse’s home counts even if the buyer has no share in it.

If the buyer, or one of the buyers, is not an individual, such as a company, the higher rates apply to any purchase of a dwelling for £40,000 or more, even if it owns no other property (LTTA/8021). For bare trusts and many settlements, the beneficiary’s position decides the rate (LTTA/8190). The general rules, filing period and main rates are covered in our LTT overview.

What are the higher rates?

For transactions with an effective date on or after 11 December 2024 the WRA rates are:

Portion of the price Higher rate
Up to £180,000 5%
£180,001 to £250,000 8.5%
£250,001 to £400,000 10%
£400,001 to £750,000 12.5%
£750,001 to £1,500,000 15%
Above £1,500,000 17%

Unlike the main rates, which start at 0% up to £225,000, the higher rates charge tax from the first pound. The WRA’s own example is a second home at £260,000, which costs £15,950. These rates do not apply where contracts were exchanged before 11 December 2024.

Which purchases are excluded?

The WRA lists these exclusions at LTTA/8060:

  • consideration under £40,000;
  • non residential or mixed use purchases, such as a shop with a flat above;
  • subsidiary dwellings, such as an annexe in the grounds, where the main dwelling accounts for at least two thirds of the price and the conditions are met;
  • replacement of a main residence;
  • certain purchases of a further interest in your own main residence, and interests kept in a former matrimonial home after divorce or dissolution;
  • purchases by a court appointed deputy for a minor child;
  • interests subject to a lease of more than 21 years to someone unconnected;
  • dwellings bought between 13 February 2026 and 31 March 2031 and then leased to a Welsh local authority, through a refund described below.

An inherited share of 50% or less in a dwelling is ignored for 3 years from the inheritance (LTTA/8230).

How does the replacement of main residence rule work?

A buyer who replaces their only or main residence can pay the main rates instead. The new home must be bought within 3 years after selling the old one, or the old one sold within 3 years after buying the new one, and the old home must have been the buyer’s only or main residence at some point in the 3 years before the purchase (LTTA/8090). Which home is your main residence is a question of fact, not ownership.

  • Sold first: if the old home has already been sold when you buy, main rates apply from the outset.
  • Bought first: you must self assess at the higher rates and claim a refund later.
  • Sold within the filing period: if the old home sells before the return for the new one is filed, the return can be made at main rates (LTTA/8130). The return must be filed after the sale completes, not in anticipation of it.

Longer permitted periods can apply where the old home has a fire safety defect or where a relevant restriction substantially hindered a sale or purchase (LTTA/8121 and LTTA/8122).

How do you claim a refund?

The WRA has an online form to claim back LTT paid at the higher rates once the previous main residence has been sold within 3 years. The buyer, the conveyancer who acted on the purchase if still acting, or someone else authorised can claim. You need:

  • the 12 digit Unique Transaction Reference Number (UTRN) from the original return and the effective date;
  • the address of the former main residence and details of all buyers;
  • a signed and dated TR1, TP1 or contract of sale for the old home if it was in England or Wales, or a completion statement if it was elsewhere; an unsigned transfer, the transfer for the new home or an LTT certificate will not do;
  • bank details of whoever should receive the repayment.

The refund is usually the tax paid at the higher rates less the tax at the main rates for the same date. Within 12 months of the filing date you can instead amend the return under section 41 of the Tax Collection and Management (Wales) Act 2016. Otherwise the claim goes under section 63 and must be made within 4 years from the day after the filing date. The WRA says claims usually take 15 to 20 working days.

What does a refund look like in practice?

Illustration only. Sam buys a new main home in Wales for £300,000 on 1 May 2026 while still owning her old flat. She self assesses at the higher rates: 5% on £180,000 (£9,000), 8.5% on £70,000 (£5,950) and 10% on £50,000 (£5,000), a total of £19,950. At main rates the tax would have been 6% on the £75,000 above £225,000, or £4,500. The flat sells on 1 February 2027, inside 3 years, so Sam can claim £15,450 back. As the sale falls within 12 months of the filing date for her return, she can either amend that return or use the WRA refund form.

What is the refund for leasing to a Welsh council?

Since 13 February 2026 a buyer who paid the higher rates can claim back the difference from the main rates if the dwelling is let to a Welsh local authority (LTTA/8270). The conditions are:

  • purchase between 13 February 2026 and 31 March 2031, for £400,000 or less;
  • a lease to the council granted within 18 months of the purchase, for at least 5 and no more than 20 years;
  • rent no higher than the local housing allowance for the dwelling.

The claim must be made within 12 months of granting the lease, as a refund claim rather than an amendment. If the lease ends before its fifth anniversary, the relief falls away and a further return is due within 30 days beginning with the day after it ends.

What mistakes come up most often?

  • Overlooking a spouse’s property, a share in a buy to let, or a home abroad.
  • Valuing a jointly owned property as a whole. It is the value of your own share that is tested against £40,000, worked out differently for joint tenants and tenants in common (LTTA/8040).
  • Filing at main rates before the old home has actually completed.
  • Uploading the wrong transfer deed with a refund claim.
  • Applying English rules. The SDLT higher rates and the Scottish Additional Dwelling Supplement have different rates and time limits, and SDLT refunds follow their own process, explained in our guide to reclaiming SDLT after selling your old home.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.