Scotland scraps Stamp Duty
The Land and Building Transactions Tax (Scotland) Bill proposes the removal of any kind of purchasing tax for those buying property worth less than £175,000, while property costing more than this threshold will henceforth be taxed a proportion of the property’s value on a sliding scale.
The new charges will replace the existing Stamp Duty Land Tax currently applicable on property purchasers throughout the UK, which has been criticised for many years as ‘regressive’.
Existing Stamp Duty charges, which will continue to apply in England, Wales and Northern Ireland for the foreseeable future, are charged at 1% of the purchase price on property costing between 125,000 and £250,000, 3% up to £500,000, 4% for £500,000 to £999,999 and 5% on £1m+ properties.
This ‘slab’ approach is accused of distorting the housing market around the thresholds themselves. Governments have also been criticised for failing to increase the thresholds at which the various rates apply in line with house price increases over the last 20 years.
Scottish Finance Secretary John Swinney told BBC Radio Scotland:
“With parliament’s approval, the passing of this bill will be a huge milestone for Scotland – it will enable us to set and collect taxes in a more cost effective and fairer way than the UK government.
“This bill will give us the opportunity to better support first-time buyers trying to get onto the housing ladder or families buying bigger homes that better suit their needs.”
Critics of the reform have warned families in expensive areas such as Edinburgh could face a hike in taxes of several thousand pounds.
In most cases, anyone purchasing a property under £2m will pay the same or less under the new regime, while those purchasing a higher value will pay more. But those purchasing a house for £250,000 will have to pay £500 more.
However, the Council of Mortgage Lenders has welcomed the proposal and called for the UK government to follow the Scottish government’s lead on introducing a more progressive Stamp Duty.