Higher tax on homes makes investors wary

Investment managers are ‘wary’ of putting their money into Scotland because they will face ‘additional tax charges’, experts warned yesterday.

the chartered institute of taxation (Ciot) has urged the Scottish Government to overhaul a controversial property tax in a bid to encourage investment north of the Border.

the organisation claims differences between the system in Scotland and elsewhere in the UK are putting off investors such as pension funds and insurance companies from investing cash.

now experts have told ministers that to encourage growth they must offer relief to ‘streamline and improve’ the land and Buildings transaction tax (Lbtt).

the controversial property levy has made it significantly more expensive to buy a home valued above £325,000 – which experts believe is putting people off moving in to larger houses.

now concerns have been raised over how the tax is hampering investment in large property sites costing more than £100million. Scottish tory finance spokesman Murdo Fraser said: ‘it is clear this Snp policy is discouraging investment into Scotland and “seeding relief” is a sensible first step to improve the efficiency of the system.

‘But the Snp must rethink this policy as a result of the predicted lower tax take and make Scotland more competitive.’

the Snp has been repeatedly criticised over Lbtt. Yesterday the Ciot was the latest organisation to point out problems with the current system preventing the growth of investment in large property plots.

But it welcomed moves by the Scottish Government to consider a relief system for investors which would bring it in line with Stamp Duty land tax south of the Border.

Moira Kelly, chairman of the Ciot Scottish technical committee, said: ‘By choosing to consider the introduction of reliefs similar to those already in force elsewhere in the UK, the Scottish Government is adopting a common sense approach that will streamline and improve the efficiency of the Lbtt regime.

‘this will provide greater simplicity and certainty for taxpayers.

‘Mirroring the regime in the rest of the UK will also make it more likely that property investors will consider including Scottish properties in their portfolios.’