Finance secretary names date for LBTT threshold change
Homebuyers will be able to take advantage of reduced rates of Land and Buildings Transaction Tax (LBTT) from this week, after finance secretary Kate Forbes responded to calls for a quick implementation of the change.
The threshold at which LBTT begins to be paid will rise from £145,000 to £250,000 on July 15 and remain in place until March 31 next year.
Responding to the threshold change announcement last week, Homes for Scotland called for clarity on its timing while the Chartered Institute of Taxation (CIOT) warned of a stalled housing market with people putting off buying a house until the tax change takes effect.
Excluding the Additional Dwelling Supplement, the change means that 80% of home purchasers will pay no LBTT. Home movers buying a home costing more than £250,000 will save £2,100.
The decision came in response to Chancellor Rishi Sunak’s Summer Statement in which he announced plans for a stamp duty cut in England and Northern Ireland until the end of March 2021, prompting calls for Scotland to follow suit.
In addition, an extra £50 million is being added to the First Home Fund, a shared equity scheme providing first time buyers with up to £25,000 to buy a property. The finance secretary said this will support an estimated 2,000 first time purchases and increase the total funding to £200m.
Ms Forbes said: “I am delighted that we are able to implement this measure quickly and remove uncertainty from the market.
“The UK Government had weeks to prepare for its decision this week to raise the threshold at which Stamp Duty Land Tax is paid on house purchases in England and Wales, yet we were given no advance notice.
“We responded (last week) to clarify our policy intentions and by introducing the change so rapidly, we are providing certainty to people in the process of purchasing a home. Overall, increasing the LBTT threshold will help increase housing market activity, boost the construction sector and stimulate our economy.
“Alongside this distinctive Scottish approach to raising the starting threshold for LBTT, I am also targeting further support in other areas. For example, we are injecting £50m into our First Home Fund, which provides first time buyers with up to £25,000 to buy a property. This will help an estimated 2,000 first time purchases.
“To mitigate the immediate adverse impact on the housing market in Scotland as a result of the Chancellor’s announcement, we are now working at pace on the necessary legislation and to ensure Revenue Scotland is ready to collect and manage the tax.”
Provisional affirmative legislation facilitating the change in LBTT threshold will be laid in the Scottish Parliament this week. The change will be made with effect from Wednesday but will require approval by the Scottish Parliament within 28 days to remain in force. The rates for the Additional Dwelling Supplement and non-residential LBTT remain unchanged. More detail is available here.