Taylor Scott International News
A new Land and Buildings Transaction Tax (LBTT) is set to replace Stamp Duty (SDLT) for Scottish residential and non-residential property sales in April of next year. LBTT, which received Royal Assent in the summer of 2013, is part of the Scottish Government’s devolved tax raising powers and was not dependent on the outcome of the referendum and applies to Scotland only. The rates announced by the Cabinet Secretary for Finance, John Swinney, mean that many home owners at the lower end of the property market in Scotland will be better off when the progressive tax replaces the much criticised Stamp Duty which is a slab tax. In a move designed to help first time buyers, the threshold for LBTT is set at £135,000, up from the stamp duty threshold of £125,000. A marginal tax of 2% would apply to the proportion of a transaction between £135,000 and £250,000, while a 10% rate will apply to those between £250,000 and £1 million. There will be a new 12% tax on properties costing more than £1 million. ‘As a result of the rates I have announced today, nobody will pay tax on the first £135,000 of their house purchase. Some 5,000 more transactions will be taken out of tax, supporting first-time buyers and those buying properties in the affordable market,’ said Swinney. But others will pay more. According to Savills Research, buyers in Edinburgh, where an average family house costs around £363,000, will be paying £13,600 in tax under the new system, which is 25% more than they would have paid in Stamp Duty. Buyers of properties of £450,000, will now pay 65% more at £22,300. Taking all properties into consideration across Scotland from above £125,000, the new LBTT payments on residential property transactions will be on average 56% more than the existing stamp duty. ‘We welcome a progressive new system and the fact that the majority of home owners will be better off. When compared with other parts of the UK house prices in Scotland remain comparatively low. However for some sections of the market the new rates are not good news, and it comes at a time when the Prime Scottish market is only just beginning to recover,’ said Savills head of residential in Scotland Andrew Perratt. ‘Young families who need to live in the prime hubs of Edinburgh, Aberdeenshire and Glasgow’s west end, where average house prices are considerably higher, the proposed increases are so punitive they may discourage many buyers from moving. In view of this, we anticipate increased market activity between now and the spring, whereby buyers are likely to make quick and committed decisions before the new tax comes into force in April,’ he explained. ‘With the referendum now behind us, the Scottish market has been poised for a healthy recovery. However this relies on activity at both ends of the market, not just from first time buyers, and the new tax will… Taylor Scott International
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