The Scottish parliament has proposed its first independent tax change in 300 years, unveiling a new levy on land and building transactions to replace the UK stamp duty land tax from April 2015.
Those buying Scottish properties that cost less than £324,000 will save money, while homes over £1m will pay an equivalent of a marginal top rate of 12 per cent stamp duty land tax, as opposed to the 7 per cent for homes worth over £1m under the existing UK system.
The measures, announced yesterday (9 October) are the first moves made under fiscal powers already devolved in 2012, and had already been put forward in the Draft Scottish Budget for 2015/16.
The new rates will only be payable on the portion of the total value which falls within each band, which contrasts with the ‘slab’ structure of stamp duty under which the higher tax rate is payable on the whole purchase price when a threshold is crossed.
The rates will also take 5,000 additional house purchases out of tax by ensuring that nobody will pay tax on the first £135,000 of their house purchase - £10,000 higher than the current stamp duty threshold - and ensure that 90 per cent of homebuyers will either pay less or the same amount as they would under current arrangements.
The devolved taxes will be collected by Revenue Scotland and are expected to bring in an estimated £558m in 2015/16. Scotland’s block grant will be adjusted to recognise that these tax receipts will flow directly to Holyrood rather than to the Treasury in London.
John Swinney, Scottish finance secretary, said: “The land and buildings transaction tax is the first tax created by the Scottish parliament in 300 years. The old stamp duty was outdated - causing unfair tax hikes at set property prices - this led to the market being distorted and led people to try to avoid tax.
“Our proposed residential transaction rates will be more proportionate to the house price, and means that the tax is fairer as it is based more closely on the buyer’s ability to pay.
“New taxation and borrowing powers are a step forward but I believe that the Scottish parliament should be responsible for the full range of taxes levied in Scotland. This way we can continue to drive forward prosperity and fairness in Scotland for all of our citizens.”