Wednesday, 10 December 2014
LBTT is the acronym for Land and Buildings Transaction Tax. In Scotland this new tax will replace stamp duty.
Last week George Osborne used his Autumn statement to announce an overhaul of of stamp duty that will result in families across the UK paying thousands of pounds less from last Thursday.
But George Osborne’s cut will only apply in Scotland until April, when control over the levy is passed to the Scottish Parliament and John Swinney replaces it with LBTT.
Those buying a normal family home in England will continue to pay 5% of the purchase price above £250,000 but the changeover to John Swinney’s LBTT means Scottish home purchasers will have to pay 10% above that sum making purchasers pay 5% more than their English counterparts.
John Swinney insists that 80% of Scottish buyers will be better off under his plans I’m told. Really? I’ve done a small calculation of homes in my nearest town and apart from flats - although there are a few advertised over the £250,000 threshold - my figure resulted in over 60% of homes here showing they will be affected by this extra 5% tax in comparison to English homes.
My local town isn’t Edinburgh or regarded as ‘a posh place’ in Scots jargon. It’s an average rural town with a population of roughly 20,000 and a mix of homes. In recent years Perth and Kinross Council has actively encouraged national builders to come here and build expensive family homes. Regular readers will know I participated in a protest about a development which was built on greenbelt when there were plenty of other sites available. (An interesting update to this development is that the 25% social housing has been cancelled with the reason supplied ‘the housing organisation involved could not acquire the funding’. How convenient. Now that particular developer can go ahead and build £300,000+ homes on the site planned for social housing and receive much greater profits).
Back in October John Swinney was warned he was placing too much burden on the middle classes when he announced the BBTT rates in October, but the tax hike we Scots now face is much steeper thanks to George Osborne’s reforms.
Those buying a £275,00 property in England - the cost of the average British home - will pay £3,750 stamp duty compared to £8,250 under the old system, but here in Scotland we will see bills increase to £4,800 under LBTT thanks to the rates and bands John Swinney has chosen.
John Swinney is quoted as saying his rates and bands were ‘designed for Scottish circumstances, not London house prices’. My local town is his local town. He needs to have a rethink about his LBTT rates because most homes in the multitude of new developments are priced over £250,000 and there are plenty of them awaiting owners.
Mr Swinney’s constituency of North Perthshire is regarded as fairly affluent mainly due to agriculture, but it has pockets of strong Tory supporters. They are the only voices to be heard regarding the LBTT this week. I hope more join in the conversation regardless of party affiliations. Not only will his excessive 10% rate halt the sale of new homes, it will suppress the natural value of them.
Time to reconsider Mr Swinney.