Changes to Land & Buildings Transaction Tax
The Scottish Government yesterday announced changes to its new Property Tax – Land & Buildings Transaction Tax (LBTT), which will replace Stamp Duty Land Tax (SDLT) from 1st April 2015.
The original proposed rates and thresholds for LBTT were revealed by the Scottish Government in October. However, after the Chancellor made immediate changes to Stamp Duty in the Autumn Statement, Deputy First Minister John Swinney has announced a series of alterations to LBTT, before it has even come into force.
With effect from 1st April, the starting point for payment of LBTT has been raised from the original proposed level of £135,000 to £145,000, with SDLT currently being paid above £125,000.
A rate of 2% will apply to transactions between £145,000 and £250,000, with a new rate of 5% to be introduced for transactions between £250,000 and £325,000.
It was initially proposed that transactions between £250,000 and £1 million would suffer a charge of 10%, but the 10% rate will now be charged on transactions between £325,000 and £750,000, whilst those in a position to purchase a property in excess of £750,000 will pay the top rate of 12%.
The new rates are payable on the portion of the total value which falls within each band.
Whether or not these changes are a result of the “fastest U-turn in history” as Mr Swinney’s political opponents have claimed, or whether or not they are as a result of an ongoing review, ultimately more home buyers in Scotland will benefit from less tax.
The new rates and thresholds, to take effect from 1st April 2015, compared to current rates of Stamp Duty Land Tax, and indeed the future rates for the rest of the UK are as follows:
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Under the original proposals, anyone purchasing a property up to £324,300 would have been better off than under the previous SDLT arrangements. The introduction of the current SDLT rates and thresholds in the Autumn Statement would have meant that, without the new proposed changes, anyone buying a property in Scotland for more than £254,000 would have been worse off than the rest of the UK.
The new proposed rates and thresholds have re-adjusted the original balance that the Scottish Government had looked for, and now the house buyer purchasing a property in Scotland for up to just under £333,000 will be better off than house buyers in the rest of the UK.
Whatever the reasoning, any further saving for home buyers must surely be welcome for the property market in Scotland.
