Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 section Schedule 14 para 10

Tax calculation for collective purchases by flat tenants

Schedule 14 paragraph 10 sets out a special method for calculating land transaction tax when qualifying tenants of flats collectively purchase their building, either through the right of first refusal or the right to collective enfranchisement.

• This provision applies when a nominee or appointee of qualifying flat tenants enters into a land transaction exercising either the right of first refusal under the Landlord and Tenant Act 1987 or the right to collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993.
• The tax is calculated by first dividing the total consideration by the number of qualifying flats to arrive at a notional per-flat price, then computing the tax on that per-flat amount as if it were a standalone transaction.
• The resulting per-flat tax figure is then multiplied by the number of qualifying flats to produce the total tax due, which is typically lower than the tax that would apply if calculated on the full purchase price in one go.
• A "qualifying flat" is one held by a qualifying tenant who is actually participating in the exercise of the right; flats whose tenants are not participating are excluded from the calculation.