Land Transaction Tax in Wales: when goodwill is not part of the taxable land price
Goodwill and Welsh land tax
Goodwill may form part of the price when a trading property is sold as a working business. WRA says its value depends on the facts of the sale.
- Start with the value of the business as a going concern.
- Deduct the value of separately identifiable assets.
- Use a fair split where one price covers land and other assets.
Scroll down for the full analysis.
Read the original guidance here:
Land Transaction Tax in Wales: when goodwill is not part of the taxable land price
Land Transaction Tax in Wales: when goodwill is not part of the taxable land price
When you buy a pub, hotel or petrol station, part of the price may be for its trading goodwill rather than its land. That split can affect Land Transaction Tax, Wales’s version of stamp duty, because the tax looks at the amount paid for the land.
What this rule is about
Goodwill is the extra value in a working business, measured as the difference between the business value as a going concern and the value of its separate assets.
A going concern is a business that can keep trading. Its name, reputation, customers and trading potential may all create value.
For a pub, hotel, petrol station or post office, a sale may command more when the business is ready to run, rather than merely offering its physical assets. That additional value can be goodwill.
The question is not simply: “Is there goodwill?” WRA accepts that there may be. The hard question is what that goodwill is worth.
What the official source says
This is WRA guidance, not the law itself. WRA says it follows the same goodwill valuation principles as HMRC for this issue.
For a trade-related property, WRA’s approach is to start with the business value as a going concern. That value can be substantial. Facts decide it. Then subtract the value of every separately identifiable asset included in the sale.
- Goodwill can form part of the sale of a business that continues trading.
- Its value may be very small in one sale and large in another.
- The property type and its use affect the answer.
- The normal starting point is the price achieved in an open-market sale.
- If the deal was not at arm’s length, an arm’s-length business value must instead be established.
What this means in practice
You cannot safely treat a label in the contract as the answer. Calling part of the price “goodwill” does not, by itself, show that the figure is fair.
The law includes money or other value given for the land in the taxable amount. If a single price covers land and something else, the amount must be divided on a just and reasonable basis.
- Work out the whole value of the business as a working business.
- Identify the land and every other separate asset included in the deal.
- Use values that support a fair split of the overall price.
- Keep material that explains how the figures were reached.
That is the key point. Goodwill is not a spare label for moving value away from land.
How to analyse it
Start with what is really being bought, not only the wording used by the buyer and seller. The facts should show whether a business is being transferred as a going concern.
- Is the property designed for a particular kind of business?
- Will the business be able to carry on after the sale?
- What was the open-market price for the working business?
- Which assets have a separate value, including the property itself?
- Does subtracting those asset values leave a goodwill figure?
- Was the price agreed freely between independent parties?
Details matter greatly.
Next, test the numbers against the deal. Where connected parties agree a price, or the sale did not face the open market, WRA says they need to establish an independent arm’s-length value of the business.
Example
Here is a simple illustration. Nia buys a trading hotel for £600,000 in an open-market sale.
Because this sale bundles premises, furniture, equipment, stock and an established trade, the valuation must keep those distinct sources of value apart, rather than hide them together in one broad figure for tax.
A supportable value for the hotel building is £420,000, while furniture and equipment are worth £50,000 and stock is worth £30,000.
The separately identifiable assets total £500,000. On WRA’s stated approach, the remaining £100,000 is goodwill: £600,000 less £500,000.
This does not set Nia’s tax bill. It shows how the goodwill figure is found before the price is split fairly between the land and the other things bought.
Why this can be difficult in practice
Valuing a live business is rarely mechanical. Two similar buildings may have different goodwill when one has a strong trade and the other does not.
WRA says an open-market price will usually represent the going-concern value, but where a deal is non-independent and has not been tested between independent parties, a different valuation exercise is needed. That exercise is different.
- A property’s trading potential can be confused with the value of the building.
- Furniture, equipment and stock need their own realistic values.
- A single contract price may hide an unsupported goodwill figure.
- Connected parties may not have agreed an open-market price.
Evidence may help explain the split, including the sale agreement, asset list, marketing details, accounts and valuation material. The source does not give a fixed formula or percentage.
Key takeaways
- Goodwill is the value left after separate assets are valued.
- WRA says each case depends on its own facts.
- A fair split matters more than the label used in the contract.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- LTTA 2017 section 18 — schedule rules for the amount paid
- LTTA 2017 Schedule 4 para 1 — payments and value given for land
- LTTA 2017 Schedule 4 para 4 — fair splitting of a price across matters
Official guidance
The pages below are the Welsh Revenue Authority’s guidance. Guidance is not law. It sets out how the Welsh Revenue Authority reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. the Welsh Revenue Authority can also change or withdraw guidance, and it may not cover your facts.
- Welsh Revenue Authority, LTTA/2340 Goodwill
Where this is not settled
- The source gives no fixed formula or percentage for goodwill.
- The correct value of a live business and its separate assets can be fact-sensitive.
- The source does not explain how WRA will resolve a disputed valuation.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- sale agreement and price allocation
- schedule of land, stock, furniture and equipment
- marketing material and open-market offers
- business accounts and trading information
- valuation evidence supporting the separate figures
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching Land Transaction Tax (LTT), the tax on property in Wales. It replaced Stamp Duty Land Tax in Wales on 1 April 2018, and SDLT does not apply in Wales. MY QUESTION Goodwill when buying a business property in Wales [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - LTTA 2017 section 18 - schedule rules for the amount paid https://www.legislation.gov.uk/anaw/2017/1/section/18 - LTTA 2017 Schedule 4 para 1 - payments and value given for land https://www.legislation.gov.uk/anaw/2017/1/schedule/4/paragraph/1 - LTTA 2017 Schedule 4 para 4 - fair splitting of a price across matters https://www.legislation.gov.uk/anaw/2017/1/schedule/4/paragraph/4 Guidance page from the Welsh Revenue Authority on this topic (guidance, not law): https://www.gov.wales/chargeable-consideration-technical-guidance#5127 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from the Welsh Revenue Authority is its view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - The source gives no fixed formula or percentage for goodwill. - The correct value of a live business and its separate assets can be fact-sensitive. - The source does not explain how WRA will resolve a disputed valuation. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 3 September 2026
Useful article? You may find it helpful to read the original guidance here: Land Transaction Tax in Wales: when goodwill is not part of the taxable land price
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