29 Jun 2017
The Scottish Government has said it is willing to reconsider its replacement to the old stamp duty system after controversial new property taxes were blamed for stagnating sales.
Finance Secretary Derek Mackay said he was willing to look at shifting the bands for Land and Buildings Transaction Tax (LBTT), potentially saving homebuyers thousands of pounds.
The new tax replaced stamp duty in 2015, but has consistently failed to raise as much revenue as expected amid claims the measure was poorly designed.
Official figures show property transactions in the top half of the housing market have gone into reverse since the tax was introduced, with LBTT now expected to raise as much as £800 million less than forecast over the life of the current parliament.
Property purchasers are charged a percentage based on sale value, starting from £145,000. The levy is 2% on purchases between £145,000 and £250,000; 5% between £250,000 and £325,000; 10% between £325,000 and £750,000; and 12% on properties costing more than £750,000.
Until now ministers have refused to bow to pressure over LBTT, but in a newspaper interview, Mr Mackay has said he is willing to raise the upper limit of the 5% band to £500,000, easing the tax burden on thousands of homebuyers in the middle of the property market.
If the change is carried out, it could provide an average saving of £9,000 to affected buyers.
Mr Mackay told the Sunday Times: “I’m not an ideologue on this issue. We want the tax to function well and if there’s a case that an amendment of the current bands could help stimulate the housing market in that range, and the revenue it raises, then I will consider it.”
He added: “It’s early days. It’s normal to review policies.”
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