Land and Buildings Transaction Tax - the latest update
New rates and bands for Land and Buildings Transaction Tax (LBTT) which will replace UK Stamp Duty Land Tax (SDLT) from 1st April 2015 were announced by the Scottish Finance Minister, John Swinney, on 21st January 2015. These replace the proposed rates and bands that were announced in October 2014 in a Draft Budget. This review of the rates and bands follows the overhaul of the UK SDLT system which was announced by the Chancellor, George Osborne, in his Autumn Statement in December and highlighted in earlier news articles on our site. The revamped SDLT charges meant that properties at the higher end of the market attracted a much lower rate of tax than under the proposed rates for the new Scottish tax.
The proposed new rates for LBTT have been cut. No tax at all will be paid on properties costing less than £145,000 (compared with £125,000 under SDLT). The next band comprises properties between £145,001 and £250,000 on which 2% will be charged. A new 5% band has been introduced for the portion of the price from £250,001 to £325,000. It had been anticipated and hoped by many that this band might be wider – the SDLT 5% band is from £250,001 to £925,000.
The next band is from £325,001 to £750,000 on which the rate of 10% will be charged and above £750,000, the rate is 12%. The result of this is that for all those buying a residential property in Scotland for up to £333,000, they will now pay less tax than under SDLT and over that price, they will pay more. The latest figures published by Aberdeen Solicitors Property Centre (ASPC) – for the third quarter of 2014 – showed that the average price for a detached house in Aberdeen City and suburbs was £358,905 so in Aberdeen, Deeside and the surrounding area, buyers are likely to be more significantly affected that in other parts of Scotland. Although the Scottish Finance Minister stated that 50% of transactions in Scotland will be lifted out of tax altogether, this is unlikely to be the case in Aberdeen where the ASPC figures for the third quarter of 2014 show that the average price paid for a flat in Aberdeen City and suburbs was £168,472!
For more information on how the proposed LBTT might affect you, contact Alison McLeod