Land Business Transaction Tax replaced UK Stamp Duty in Scotland in April 2015, with the Scottish government claiming that nine out of 10 taxpayers would be better or no worse off under the new system.
Two years on, the Scottish Government have been asked about overall effect of the change and how it is being assessed.
Liam Kerr MSP, Scottish Conservative and Unionist Party put the question to the Scottish Parliament, asking, “what has the impact of the Land and Buildings Transaction Tax been in Scotland?”
MSP Derek Mackay from the Scottish National Party and Cabinet Secretary for Finance and the Constitution responded:
“The Scottish Government's priority is, and remains, to help first-time buyers enter the property market and to assist people as they progress through the property market. LBTT will ensure everyone buying a property under £325,000 pays no tax or less tax than under Stamp Duty Land Tax (SDLT). 93% who bought a house for £40,000 or more either paid less tax compared to UK SDLT or paid no tax at all in the first 19 months of LBTT.
“The Scottish Parliament's recent inquiry into the first year of LBTT concluded that the transition to LBTT went well and that its first year has been operationally successful. It is too early to draw any definitive conclusions on the impact of the rates and bands from the available outturn data but recommends that the Scottish Fiscal Commission (SFC) should continue to monitor the data on an ongoing basis.”
Whilst parliament remain optimistic, the Scottish Government reported a shortfall of £100m below their LBTT predictions for 2016/17. Analysis of the Revenue Scotland figures by the Scottish Property Federation (SPF) highlighted that returns for February were £31.9 million, down from £34.2m the previous month.
Although sales were up 3.3 per cent from 2015, house prices fell 1.9 per cent and according to estate agency firm Rettie, the number of homes selling for in excess of £1m dropped during 2016.
NAEA responded to the original consultation in August 2016, commenting that following the tax changes members had seen a slowdown in activity for the high end of the market and highlighted the need for increased flexible lending criteria and support for first-time buyers.
To have your say on how the market is working where you are, please take part the next NAEA monthly survey.