The Scottish Fiscal Commission has estimated the cost of the change in residential Land and Buildings Transaction Tax (LBTT) announced last Thursday by the Scottish Government.
Previously, residential property purchasers in Scotland paid LBTT at a rate of 2 per cent on transactions between £145,001 and £250,000. The Government has now introduced legislation that temporarily increases the nil rate band to £250,000. This means no tax will be payable on transactions under £250,000 that take place between 15 July 2020 and 31 March 2021. During this period for purchases above £250,000 a zero rate applies up to £250,000 but there is no change to the rates and bands above £250,000. The policy change leads to a maximum reduction in tax of £2,100 per residential property purchase.
The Commission estimates the policy will reduce tax revenue by £33 million in 2020-21 and by £15 million in 2021-22.
The Scottish Fiscal Commission provides the official and independent forecasts to assist the Scottish Parliament and the public in understanding the Scottish Government’s tax and social security policy.
Notes to Editors:
1. The Commission’s Supplementary Costing: Increased starting threshold for residential LBTT is now published.
2. The Additional Dwelling Supplement (ADS) payable on the purchase of a second property remains unchanged at 4 per cent of the whole price. In our Supplementary Costing: Coronavirus (Scotland)(No. 2) Bill – May 2020 we costed the temporary extension to the period in which those who have paid the ADS can sell their previous main residence and qualify to claim an ADS repayment.