CIOT not sold on Welsh government's second homes buyers’ transaction tax

The proposed variation of land transaction tax (LTT) rates as a disincentive to the purchase of second homes and short-term holiday lets is likely to be harder to implement and less effective than using a recurring tax based on continuing occupation such as council tax says the Chartered Institute of Taxation in its response to a Welsh government consultation on the measure.

Lakshmi Narain chair of CIOT’s Welsh technical committee said: ‘Producing a workable test on what a buyer intends to do with a second home will be difficult and unsatisfactory. The buyer’s intentions may not be fully formed at the date of purchase and what happens if the intention changes?

‘There are also widely recognised economic arguments that transaction taxes such as LTT disincentivise people from moving house reducing the tax take and reducing mobility. While the tax is levied on...