What a relief... SNP is set for a U-turn over its 10% property tax hike
THOUSANDS of homebuyers are to be spared a crippling new tax on property after the Scottish Government signalled a major U-turn on its plans.
Finance Secretary John Swinney’s alternative to stamp duty unveiled last October would bring in a 10 per cent tax rate for people buying homes worth more than £250,000.
But he is now expected to review his Left-wing proposal following widespread concerns that it would ramp up the cost of buying even relatively modest family homes in some parts of Scotland – and force Scots to pay far more than the rest of the UK.
In a massive boost for homebuyers, the Government last night confirmed it plans to ‘consider our proposed rates and bands’ for stamp duty after it secured a better than expected funding deal from the UK Government.
Treasury chief Danny Alexander has held crunch talks with Mr Swinney in recent days and The Scottish Mail on Sunday understands the Liberal Democrat MP has told him the Scottish Government will get £64 million more in its ‘block grant’ from Westminster for 2015-16.
The extra funding means less money needs to be generated from homebuyers. Mr Swinney is now expected to announce new rates when he unveils his final Budget Bill for 2015-16 later this month.
Gavin Brown, finance spokesman for the Scottish Conservatives, said: ‘It is patently obvious that they now don’t need to collect more money and they should be getting on with reducing the tax percentages to give people a break.
‘We expected the tax rates to go up but to jump from 2 per cent to 10 per cent is unprecedented and particularly steep. You are really hitting standard family homes and that is why it is a tax on aspiration.’
Control over stamp duty transfers from Westminster to Holyrood in April.
Under proposals for the replacement ‘Land and Buildings Transaction Tax’ unveiled by Mr Swinney last October, buyers will pay no tax on property purchases worth up to £135,000, while those buying property worth between £135,001 and £250,001 will pay a 2 per cent rate.
The rate will then jump steeply to 10 per cent for all homes between £250,000 and £1 million, then 12 per cent above that.
He is under pressure to add an additional tax band between £250,000 and £500,000 – which the Scottish Tories say should be set at 5 per cent – to relieve the pressure on growing families.
The Scottish Government’s original plans were based on its block grant being reduced by £558 million. However, Treasury chiefs have been able to cut it by the lower figure of £494million – which is £64 million more than the original deal.
The Chancellor’s proposals for the rest of the UK will benefit 98 per cent of buyers, while the SNP’s plan would benefit only 80 per cent.
It also means buyers north of the Border would pay more tax than the rest of the UK on all properties above £254,000.
The Institute of Chartered Accountants of Scotland has said the changes in other parts of the UK are ‘more progressive, with a larger number of bands’.
A Scottish Government spokesman said: ‘Progress has been made, but elements of the Block Grant Adjustment have yet to be agreed.
‘Once there is a final agreement will we be able to consider our proposed rates and bands for residential Land and Buildings Transaction Tax.’