The Scottish Government has followed suit with the UK Government by announcing a temporary cut to the country’s Land and Buildings Transaction Tax (LBTT) in a bid to stimulate Scotland’s housing market.
Finance Secretary Kate Forbes has confirmed the changes would not be enforced immediately due to “administrative reasons”, with the changes scheduled to commence from Wednesday 15th July until 31st March 2021.
While UK Chancellor Rishi Sunak opted to increase the stamp duty threshold in his Summer Economic Statement from £125,000 to £500,000, the Scottish Government has opted to increase the LBTT threshold from £145,000 to £250,000.
Ms Forbes said in Holyrood that the move would ensure 80% of prospective house sales in Scotland would be exempt from LBTT in this window of opportunity, while home-movers buying properties worth over £250,000 will save £2,100 on average.
“Overall, increasing the LBTT threshold will help increase housing market activity, boost the construction sector and stimulate our economy,” said Ms Forbes.
She also confirmed that an additional £50m has been set aside for the First Home Fund, a shared equity scheme targeting first-time buyers, giving them up to £25,000 to get on the property ladder. The additional funds should be enough to support another 2,000 first-time buyers.
|Up to 250,000||0%|
|£250,001 to £325,000||5%|
|£325,001 to £750,000||10%|
The Scottish Government is also set to invest an additional £100m in targeted employment support and training in a move that Ms Forbes described as a “tailored” approach to “regenerating” Scotland’s economy.
“On employment, the Chancellor’s announcement included UK-wide schemes that will apply in Scotland, but I believe more is required to support the labour market,” added Forbes.
“We will therefore make an additional £100m available this year for targeted employment support and training.
“I recognise that we still need to do more to support employment and skills, but this is a step in the right direction.”
Additional Dwelling Supplement
The change will mean that residential property transactions where the purchase price is under £250,000, and to which the Additional Dwelling Supplement (ADS) does not apply, will attract no LBTT.
In addition to the change in the LBTT threshold which applies to purchases of main homes, it is assumed second home buyers and landlords in Scotland may partially benefit from the increase in the nil rate band. The Scottish Government announcement indicated that the rates for the ADS would remain the same.
However, the Scottish Government has also advised that where the ADS does apply, the change to the starting threshold will also apply to such transactions. This means that a residential property transaction that is liable to the ADS will not pay the standard rates of LBTT on the first £250,000 of the purchase price, however the ADS will remain payable at 4% of the total purchase price.
Date published 13 Jul 2020 | Last updated 14 Jul 2020
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