The Scottish Government has published details of the new Scottish Land and Buildings Transaction Tax (LBTT), which it says will benefit first-time buyers and those at the lower end of the housing market.
The proposed rates for LBTT – which will replace UK Stamp Duty Land Tax from April 2015 – were announced as part of the Draft Scottish Budget 2015/16. It will be the first to be introduced by the Scottish Parliament in 300 years and will change the way people pay tax on property purchases.
The proposed rates are:
- 0% on house prices up to £135,000
- 2% on house prices between £135,001 - £250,000
- 10% on house prices between £250,001 - £1,000,000
- 12% on house prices over £1,000,000
The new rates will only be payable on the portion of the total value which falls within each band. This contrasts with the ‘slab’ structure of stamp duty under which the higher tax rate is payable on the whole purchase price when a threshold is crossed.
“The old stamp duty was outdated - causing unfair tax hikes at set property prices. This led to the market being distorted and led people to try to avoid tax,” explained Finance Secretary John Swinney.
“Our proposed residential transaction rates will be more proportionate to the house price, and means that the tax is fairer as it is based more closely on the buyer’s ability to pay,” he added.
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