Commentary on Sections Determining the amount of tax chargeable
324.Paragraphs 5, 6 and 7 set out how the amount of tax chargeable is to be calculated. Paragraph 5 requires the amount of tax chargeable to be determined by calculating the sum of the tax related to the consideration attributable to dwellings, and the tax related to the remaining consideration. The appropriate rates and bands should be used to establish the charge to tax, including, where relevant, those that relate to higher rates residential property transactions.
325.The calculation of the tax related to the consideration attributable to dwellings is provided for by paragraph 6. This involves calculating an average price for each dwelling and determining the amount of tax that would be charged on that average price. This amount of tax is then multiplied by the number of dwellings included in the relevant transaction to give the tax related to the consideration attributable to dwellings. For linked transactions, the amount of tax is then apportioned to each transaction in proportion to its share of the total dwellings consideration.
326.Sub-paragraph (2) introduces a “tax floor” to ensure that the amount of tax determined as a result of the above calculation leads to a figure of at least 1% of the total consideration attributable to dwellings. This might occur where the average price for the dwellings falls in the zero rate tax band, leading to the buyer in the relevant transaction being fully relieved from LTT.
327.Sub-paragraph (7) provides that Welsh Ministers may by regulations substitute the current minimum 1% for a different percentage.
328.Paragraph 7(1) provides that the tax related to the remaining consideration is the appropriate fraction of the amount of tax that would be due if this Schedule did not apply. Sub-paragraph (2) sets out the calculation for determining the “appropriate fraction” of the relevant transaction and sub-paragraph (3) defines what is meant by “the total remaining consideration” for the purposes of this Schedule.