Changes to tax paid on property purchases

Changes to the tax on property sales in Scotland will reduce revenue by nearly £50 million over two years, a watchdog has said.

The threshold for Land and Buildings Transaction Tax (LBTT) has risen from £145,000 to £250,000, meaning most people buying property will pay less in tax.

The Scottish Fiscal Commission, which monitors the Scottish Government’s tax and fiscal policy, said the change will lead to a maximum tax reduction of £2,100 per residential property purchase.

It will reduce tax revenue by £33m in 2020-21 and by £15m in 2021-22, the commission said.

The Scottish Government announced the LBTT change the day after Chancellor Rishi Sunak announced similar changes to stamp duty, the equivalent tax in England.

A report from the Commission said the change had been introduced in “a very short time” in response to the Chancellor’s update.

It said: “We have seen the number of residential property transactions in April and May 2020 fall to around one-third of what we would normally expect.

“We expect the number of residential property transactions to start to rise as lockdown lifts, but remain significantly lower than our February 2020 forecast of transactions for the rest of 2020-21.”

At the daily coronavirus briefing yesterday, Economy Secretary Fiona Hyslop confirmed the LBTT change is now in force

She said: “The threshold on which the tax is to be paid has risen from £145,000 to £250,000, excluding the additional dwelling supplement.

“This will result in savings for homebuyers of up to £2,100 and will stimulate the construction sector and the wider economy.”

Chancellor Rishi Sunak.