Enfranchisement costs and Land Transaction Tax in Wales
Enfranchisement costs and LTT
Some landlord costs paid in a statutory lease claim are excluded when working out Land Transaction Tax in Wales.
- The rule applies only under two named leasehold provisions.
- Other payments for the lease still count.
- A clear bill breakdown is important.
Scroll down for the full analysis.
Read the original guidance here:
Enfranchisement costs and Land Transaction Tax in Wales
If you pay your landlord’s costs during a statutory lease claim, do not assume every pound increases your Land Transaction Tax bill. Some specified costs are left out. Other lease payments still count for LTT. LTT is Wales’s stamp duty-style property tax.
What this rule is about
Enfranchisement means gaining a new or longer lease, or buying the freehold, through a legal leasehold process. In some cases, you must meet some of the landlord’s costs.
What matters is simple: the tax treatment of those costs may differ from the price you pay for the property interest. That distinction can affect the figure used to work out LTT.
What the official source says
Specified landlord costs are excluded from LTT. According to the Welsh Revenue Authority, Schedule 4 paragraph 17 of the Land Transaction Tax Act provides the exception.
- Under section 9(4) of the Leasehold Reform Act 1967, the buyer bears costs.
- Under section 33 of the Leasehold Reform, Housing and Urban Development Act 1993, the buyer bears costs.
- For this rule, the costs relate to a grant, extension or enfranchisement of a lease.
- Other payments for that grant, extension or enfranchisement still count.
What this means in practice
Do not add qualifying landlord costs to the amount used for LTT simply because you paid them as part of the same process. Even so, the statutory exception is narrow. It does not remove the main price or every extra payment.
- Keep the landlord’s costs separate from the price of the lease or freehold.
- Ask why each amount is due, not just who received it.
- Confirm which of the two named Acts the claim used.
- Do not treat all legal and professional fees as automatically excluded.
How to analyse it
Begin with the paperwork. What actually decides the point is the legal basis for the cost and what the payment was for.
- Identify whether the transaction is a grant, lease extension or enfranchisement.
- Find the statutory notice or claim that began the process.
- Apply section 9(4) of the 1967 Act or section 33 of the 1993 Act, as appropriate.
- Match each item on the bill to the landlord cost it covers.
- Separate those costs from the premium and any other payment for the lease.
Example
Sam gains a lease interest through a route covered by one of the named provisions. Sam pays £250,000 for it and separately pays £2,000 of qualifying landlord costs. That £2,000 is left out when working out LTT. This rule does not exclude £250,000. Nor does it exclude any other payment for the lease.
Why this can be difficult in practice
An invoice can contain several types of payment. A label such as “costs” does not settle the issue. For exclusion, the documents must show that an item is a landlord cost under one of the two specified provisions, not another amount merely grouped with costs on an invoice or settlement figure. That proof is essential.
- A single settlement figure may hide both the price and costs.
- The leasehold route used may not be clear from the completion papers.
- Costs outside the named provisions do not fall within this specific exception.
Key takeaways
- Specified statutory landlord costs are excluded from LTT.
- The exception does not cover every payment in a lease claim.
- Keep a clear breakdown of the price and the costs.
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 Schedule 4 para 1 — what amounts paid for land normally count
- LTTA 2017 Schedule 4 para 17 — statutory enfranchisement costs that are left out
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.
Where this is not settled
- The supplied material does not explain which individual charges fall within either of the two named leasehold provisions.
- The bundled statutory material has no available currency notice, so the current wording should be checked before relying on it for a later transaction.
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.
- The leasehold notice, claim or other papers showing the statutory route used.
- The landlord’s bill and a clear breakdown of each item.
- Evidence showing which sums are the price or another payment for the lease interest.
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 Enfranchisement costs and Land Transaction Tax 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 Schedule 4 para 1 - what amounts paid for land normally count https://www.legislation.gov.uk/anaw/2017/1/schedule/4/paragraph/1 - LTTA 2017 Schedule 4 para 17 - statutory enfranchisement costs that are left out https://www.legislation.gov.uk/anaw/2017/1/schedule/4/paragraph/17 Guidance page from the Welsh Revenue Authority on this topic (guidance, not law): https://www.gov.wales/chargeable-consideration-technical-guidance#5161 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 supplied material does not explain which individual charges fall within either of the two named leasehold provisions. - The bundled statutory material has no available currency notice, so the current wording should be checked before relying on it for a later transaction. 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: Enfranchisement costs and Land Transaction Tax in Wales
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