Scottish politicians hope a new property tax scheme will help revitalize the country’s flagging real estate market and the measure is set to go into effect in April 2015. The Land and Building Transactions Tax is a progressive calculation for setting property tax rates and will replace the flat tax that is currently in use now. Time is needed to assess properties for the initial rollout and lawmakers say a proportionate tax will help first-time buyers get into the market without unfairly taxing those who are scaling up or downsizing. The Law Society of Scotland speaks highly of the measure and has high hopes for its implementation. For more on this continue reading the following article from Property Wire.
Scotland is to introduce a new stamp duty system for residential properties which will be based on a progressive calculation rather than the current flat rate levy.
A new bill allowing the Scottish Parliament to set and collect the stamp duty has been approved by politicians who say it will help to revitalize the housing market.
Under the Land and Building Transactions Tax (Scotland) Bill a new body will be set up to gather the tax from April 2015.
The rates and bands of the new tax will not be made available until September 2014 and there will now be a consultation process to help set the rates. But it is likely that properties sold for under £180,000 will not be subject to stamp duty. The tax would then be applied at a stepped rate on the amount above £180,000.
The current stamp duty rate, which is the same throughout the UK, does not apply to properties under the price of £125,000. However, the duty on properties costing more than £125,000 is applied to the whole of the sum.
‘This bill will give us the opportunity to better support first time buyers trying to get onto the housing ladder or families buying bigger homes that better suit their needs. It is this government’s belief that tax should be proportionate. That means taxpayers should have certainty about what they should pay and it should be convenient and it should be efficient,’ said Finance Secretary John Sweeney.
The Law Society of Scotland welcomed the new bill and said that there is a lot in the bill that is positive, including the fact that it is based on Scots property law which should make the legislation easier to understand and to apply.
However it said that the timescale between enactment of the Scotland Act 2012 and the start date for the new tax is very tight. The Society would welcome further clarification on how the tax will apply to partnerships, as well as further consultation on the types of licenses which will attract LBTT and the possibility of a targeted relief for forward funding transactions.
Furthermore, the Society is aware that there are some aspects of the transitional arrangements for the changeover between the UK and Scottish tax that still need to be addressed.
‘Now that the Bill has passed, there is more need than ever to get the detail right. This will be a challenge in the time we have left but I welcome the commitment by the Scottish government to continue to work with the Society and other stakeholders to consider further some of the more complex aspects of the legislation,’ said Isobel d’Inverno, convener of the Society’s Tax Law Committee.
‘Members of the Society have also been impressed by initial stakeholder meetings with Registers of Scotland in connection with the development of the online collection system for the new tax. User friendly tax return software will be key to the success of the new tax,’ she explained.
‘Given that this is the first substantial tax that the Scottish Parliament has legislated for, there is an important role for practitioners drawing on their knowledge and experience of stamp duty land tax, to tell the government what will and will not work. We hope that they will continue to listen and that we can achieve the common aim of producing a tax that is fair and understandable for taxpayers in Scotland,’ she added.
This article was republished with permission from Property Wire.