News In Focus
Finance Committee calls for views on new land tax rates
How the setting of rates for the new devolved taxes may impact on the property market and the wider economy is to be examined by the Scottish Parliament’s Finance Committee.
The MSPs are inviting evidence from interested parties ahead of their scrutiny of the Scottish Government's 2015-16 draft budget, which is due to be introduced in early October. This year it will include proposals for setting rates and bands for the devolved taxes, including land and buildings transaction tax (LBTT), which replaces stamp duty land tax in Scotland from 1 April 2015.
In particular the committee would welcome views on:
- the threshold for the purchase price of the nil rate band for both residential and non-residential property;
- the rate for the other tax bands;
- whether there should be more or fewer bands and, if so, the rate for any additional tax bands;
- whether the rates and bands should be set so that the impact of replacing SDLT with LBTT is broadly financially neutral;
- the Scottish Government’s proposal to include a lower top rate for non-residential property than for residential property.
The Land and Buildings Transaction Tax (Scotland) Act provides for a proportional progressive tax structure for both residential and non-residential property transactions. This includes a nil rate band and at least two other bands. Ministers have previously published indicative rates that would result in lower or no tax being paid on house sales at or below mid-price range, but significantly more on more expensive homes.
The committee will also take evidence on the draft borrowing plans set out in the 2015-16 draft budget, and will examine how much borrowing will be invested and how this contributes to achieving the Scottish Government’s outcomes.
Committee convener Kenneth Gibson MSP said: “For the first time, the draft budget is due to contain proposals for setting the rates for the devolved taxes. It is important that we use the opportunity of our budget scrutiny to examine the impact of these proposals and what this will mean for the property market and economy in Scotland.
“The introduction of the land and buildings transaction tax will no doubt be significant for the property market in Scotland. We want to hear whether the Scottish Government’s proposals will work in practice and if the proposed scenarios will deliver the progressive tax structure needed.”
Click here to view the call for evidence. The deadline for responses is 24 October 2014.