HOW SCOTS ARE HAMMERED BY PROPERTY TAX
THE top end of the property market is at risk because of the SNP’s ‘punitive’ tax regime, critics have warned.
Scotland already had the highest property tax in the UK before the gap widened even further last week.
On Wednesday, Chancellor Rishi Sunak scrapped stamp duty south of the Border on the sale of homes under £500,000 in a bid to stimulate the housing market in the wake of the coronavirus crisis.
SNP Finance Secretary Kate Forbes refused to mirror his sweeping changes – but later said the Scottish Government would be temporarily excluding house sales below £250,000 from the Land and Buildings Transaction Tax (LBTT).
The result is that anyone buying a home above this threshold will face paying a far higher tax in Scotland than in England.
Analysis by The Scottish Mail on Sunday reveals that anyone buying a house in Scotland for just under £500,000 will pay £20,750 more than a someone buying a property for the same value in England.
For properties worth £750,000 the difference is even more stark. In England ‘Unnecessarily expensive for people further up ladder’ the purchase would attract Stamp Duty of £12,500 but here it is almost four times as much, at £46,250 in LBTT.
Scottish Tory housing spokesman Graham Simpson said: ‘The SNP clearly hasn’t learned that being too punitive at the middle and upper ends of the market has an impact everywhere.
‘If it’s unnecessarily expensive for people further up the ladder. They won’t move, and that slows things up for everyone else. We saw that happen with previous changes made by the SNP, and risk doing so again.’
Faisal Choudhry, head of research at estate agents Savills, said: ‘Imagine how the Scottish market would perform if the rates of LBTT were lower.
‘It would give that sense of urgency. Those who were not sure about moving in the short-term would be handed more of an incentive to make that move.’
He said having three rates of property taxation in the UK – England and Northern Ireland, Scotland and Wales – confused the market.
He added: ‘We should all have the same tax structure. This should be the beginning of long-term change. I’d hope there would be a move to something more permanent. Transactions are not going to recover for a year, so government revenue is not going to be coming in.’
He did stress, however, that buyers from outwith Scotland are not necessarily put off by higher LBTT rates as they are able to get far more property for their money.
A Scottish Government spokesman said: ‘The changes to Land and Buildings Transaction Tax are tailored to the Scottish housing market.
‘This means that 80 per cent of home purchasers will pay no LBTT, excluding the Additional Dwelling Supplement. People buying a home costing more than £250,000 will save £2,100. As well as raising the starting threshold for LBTT to £250,000, we are also targeting further support elsewhere.
‘We are injecting a further £50 million into our First Home Fund, which provides first-time buyers with up to £25,000 to buy a property. This will help an estimated 2,000 first-time purchases.’