NO PROPERTY TAX BREAK FOR SCOTS
As Chancellor prepares to unveil stamp duty holiday, SNP refuses to do same north of the Border
CHANCELLOR Rishi Sunak is set to axe stamp duty on most homes today to boost the flagging housing market – but Scots will miss out.
Whitehall sources said he would introduce a six-month stamp duty holiday from tonight as part of a mini-Budget designed to boost growth and jobs.
But Scotland’s housing market will miss out, with the SNP refusing to replicate cuts north of the Border. Stamp duty here was replaced in 2015 with land and building transaction tax (LBTT), which is applied to sales of residential and commercial land and buildings.
Mr Sunak is understood to be considering raising the starting threshold for paying stamp duty from £125,000 to at least £300,000, and possibly as much as £500,000.
On a property worth the UK average of £248,000, the reduction would save a buyer £2,460. If the stamp duty threshold is raised as high as £500,000, this would be worth £15,000 to the home buyer. In Scotland, home buyers pay LBTT on home purchases over £145,000.
Mr Sunak decided to act after leaked reports revealed he was considering making a stamp duty cut in his main Budget this autumn.
Economists and property experts warned that the delay could freeze the housing market, with buyers putting off purchases until the autumn in order to avoid a tax bill running into thousands of pounds.
Exact details of Mr Sunak’s plan will be disclosed today. Last night, it remained unclear if the exemption would apply to all properties or if it would be restricted to the residential sector or even just so-called ‘affordable homes’.
Stuart Adam, senior economist at the independent Institute for Fiscal Studies, said history showed that temporary cuts in stamp duty could provide an ‘effective fiscal stimulus’ to the economy.
He added: ‘If the holiday is explicitly temporary then it can persuade people to bring forward moves that they might otherwise have delayed. If you get people buying houses again then it can pull a lot of other economic activity with it, such as spending on refurbishment, curtains, carpets, furniture, DIY and so on.
‘It doesn’t target the sectors hardest hit by the lockdown, such as hospitality. But it might help the wider economy. If you want to do a fiscal stimulus via tax cuts then a temporary cut in stamp duty is a fairly effective way of doing it.’
Treasury officials privately acknowledge that they have only limited data about the state of the country’s housing market, which was only allowed to begin trading again in mid-May.
Last night, Nicola Sturgeon was urged to replicate any cuts to stamp duty in Scotland in a bid to boost the housing market.
The announcement from Mr
Sunak could lead to additional money for Scotland through Barnett formula ‘consequentials’ but it is not yet known if cuts to stamp duty will require new funding or repurposed money.
Scottish Conservative economy spokesman Maurice Golden said: ‘It looks like the Chancellor is going to provide a much-needed boost to the housing market today.
‘It’s absolutely vital that Nicola Sturgeon matches those commitments. This isn’t just about getting the economy moving. It’s about helping first-time buyers and other families who are aspiring to move to their dream home.’
But the Scottish Government said there were currently no plans
‘Boost to the housing market’
to follow the UK Government with cuts to LBTT.
A spokesman said: ‘We are acutely aware of the massive impact the pandemic is having in Scotland, including in the housing market, and are determined to do all we can to plan for recovery as we slowly and carefully emerge from this crisis.
‘Currently there are no plans to reduce LBTT.
‘The progressive approach we have taken to setting rates and bands means that, in 2018-19, just under half of all residential transactions were below the zero rate threshold and the median home buyer paid just £200.
‘In addition, as at end March 2020 our first-time buyer relief has helped more than 21,000 taxpayers to buy a home.’