Following the news earlier this month that Scotland will introduce a new land and buildings transaction tax, Richard Carr assesses whether this will be a good move for people north of the border.
Scotland introduces new taxation powers for first time in more than 300 years
Commercial and Residential Development Consultant Richard Carr has operated in the sector for 30 years, achieving planning permission for both himself and clients.
Scotland’s Land and Buildings Transaction Tax (LBTT) is set to replace the current stamp duty land tax. It will be charged at 10% of the purchase price of a home between £250,000 and £1m and 12% on more expensive properties.
Mixed reaction to proposed new taxations
The LBTT announcement was made as part of the draft Scottish Budget 2015/16. It will supposedly benefit buyers of cheaper properties, whilst the new rates will only be payable on the portion of the total value which falls within each band.
Focusing on the positives, the Scottish government said the rates would take an extra 5,000 house purchase out of tax by ensuring that nobody paid tax on the first £135,000 of their house purchase.
Doug Smith, Chairman of CBRE in Scotland, countered: “In itself, this announcement may appear to have little significance beyond those having an interest in the Scottish property market whether as home owners, investors or occupiers.”
David Melhuish, Director at the Scottish Property Federation, held a similar view: “The property markets in Scotland have improved over the last year but we are concerned that the higher rates proposed for LBTT are too penal, and that this may have a negative impact on future growth in the property markets and potentially for future development investment as a whole.”
It isn’t great, but at least it isn’t ‘Mansion Tax’
In Richard Carr’s opinion, he believes that the Scottish government has missed a great opportunity to reform its tax system. They have focused on the positives and yes, there will be a few winners, but the overall impact on Scotland’s competitiveness will be terrible.
However, the Scots will still have it better than the Brits who face being raided by Labour’s proposed Mansion Tax. Scotland’s LBTT will see a levy on transactions which are bad in their own right, but less so than tax on assets and wealth like Labour’s plans.
Richard continues, whichever way you look at it for both England and Scotland further taxation is counterproductive and will do exactly the opposite to what it set out to achieve. Which simple put means less house building, less property transactions and less jobs.