Scotland legislates to replace Stamp Duty Land Tax from April 2015

The Scottish Parliament has legislated to replace Stamp Duty Land Tax with a Land and Buildings Transaction Tax (LBTT) from 1 April 2015.

Rather than the slab structure of the Stamp Duty Land Tax, the LBTT has a progressive rate structure, which means that the taxable amount is on the portion of the total value which falls within each band. 

In the Scottish Government's Draft Budget for 2015/16, it says that as well as redistributing the tax burden from lower to higher value transactions the new tax will also complement its commitment to home ownership.

For residential purchases, the following bands and taxation would apply under the new LBTT:

Up to £135,000                   = 0%

£135,000 to 250,000           = 2%

£250,000 to £1m                 = 10%

Over £1m                            =  12%

To read the Scottish Government's Draft Budget in full you can find it here.

BSA response to 2012 consultation on Scottish Land and Buildings Transaction Tax

On June 2012 the Scottish Government published a consultation on introducing a Scottish Land and Buildings Transaction Tax, which can be read here.

In the BSA's response to the consultation response we state that:

1. We strongly agree that the Scottish Government should move from a slab structure for Stamp Duty Land Tax to a progressive structure for the new Land and Buildings Transactions Tax. Current evidence indicated bunching around the thresholds, rather than there being a smoother distribution of house prices, as would be expected in a well-functioning market. This results in cautious consumers reluctant to buy a property in the next price band due to the prohibitive increase in stamp duty. It also puts downward pressure on prices of properties with market values just above threshold levels, discouraging these sellers at a time when the number of property transactions is low. A progressive taxation system would avoid these issues and create a more equitable model for tax on acquiring property.

2. We also agree that the Scottish Government should develop an electronic system to allow for simultaneous submission of Land and Buildings Transaction Tax returns, payment of tax and registration of title.

We urged the Scottish Government to work with the lending and legal communities in the development of the system.

BSA response to Taking forwards a Scottish Land and Buildings Transactions Tax

The Scottish Government subsequently published an analysis of the responses it received to the consultation, which can be read here.