Stamp duty is slashed... but Scots face paying thousands more in tax
HOMEBUYERS in Scotland face paying far more tax than those in other parts of the UK.
Chancellor Kwasi Kwarteng yesterday announced he would double the tax-free threshold for paying stamp duty in England to £250,000.
He also announced that first-time buyers south of the Border will now be exempt from paying tax on the first £425,000 of any purchase.
But property taxation is devolved and the Scottish Government has already forced many buyers to pay more than for similar purchases south of the Border.
In Scotland, buyers pay a 2 per cent land and buildings transaction tax (LBTT) on purchases between £145,001 and £250,000, before it rises to 5 per cent up to £325,000,
‘Help people get on property ladder’
10 per cent up to £750,000 and 12 per cent over £750,000. The exemption for first-time buyers is only available up to £175,000.
The Scottish Government will receive an extra £170million for the stamp duty changes announced by Mr Kwarteng.
Scottish Secretary Alister Jack yesterday urged the SNP to use the money to announce a similar cut to LBTT to ‘make Scotland competitive’.
He said: ‘Use that to help people get on the property ladder by cutting property taxes.’
John Boyle, director of research and strategy at property firm Rettie, said: ‘The concern in Scotland is that current levels of LBTT has a dampening effect on the upper levels of the market because it costs you more to move.
‘The tax is seen as a barrier on moving. The gap [between LBTT and stamp duty] has just got bigger at the middle to upper ends of the market.
‘We’ve said before that the current rates of LBTT are quite punitive on the middle to upper end of the market.
‘In our view, the market would be stronger if property tax was less punitive as this should produce more sales and generate more revenue.
‘The Scottish Government would probably have preferred the status quo but it’s going to have to make some kinds of adjustments based on the announcement.’
In his statement yesterday, Mr Kwarteng described home ownership as ‘the most common route for people to own an asset, giving them a stake in the success of our economy and society’.
He said cutting stamp duty would support growth, increase confidence and help families aspiring to own their home.
The tax-free threshold outside Scotland will rise from £125,000 to £250,000 with immediate effect, while the exemption for first-time buyers will rise from the first £300,000 of a purchase to the first £425,000, as long as the price doesn’t exceed £625,000.
Mr Kwarteng said: ‘The steps we’ve taken today mean 200,000 more people will be taken out of paying stamp duty altogether.’
Liz Cameron, chief executive of the Scottish Chambers of Compowers merce, urged the Scottish Government to follow suit.
She said: ‘As we look ahead to the Scottish Government’s emergency budget, businesses and households now play the waiting game to see if the Scottish Government opts to take similar moves. With control of such as income tax and land and buildings transaction tax devolved to Scotland, the expectation will be for the Scottish Government to deliver parity with the rest of the UK.
‘Divergence between the nations risks dampening business and investor confidence.’
Homes for Scotland chief executive Jane Wood said: ‘Today’s announcement goes to further highlight the policy divergence between Scotland and the rest of the UK.
‘At a time when Scotland has an under-supply of housing approaching 100,000 homes, this is highly concerning in the context of attracting investment and ensuring that those delivering the homes that our country desperately needs are on a level playing field with counterparts south of the Border.’ Deputy First Minister John Swinney said: ‘Because of inflation, the Scottish Government’s budget is worth £1.7billion less than it was when we set it in December, yet the Chancellor has refused to provide a single additional penny for public services or increase public sector pay.
‘We are doing everything within our power to support people, public services and the economy, but these efforts are under threat by a reckless UK Government beginning a new and dangerous race to the bottom.
‘With a fixed budget, and no scope to borrow for short-term challenges, Scotland is at the mercy of UK decisions.
‘This reinforces the urgent need for independence.’
‘A stake in success of our economy’