Stamp Duty Scrapped In Scotland For Fairer Tax

[timebandit]

Scotsman.com

The changes will be introduced after both Stamp Duty and Landfill Tax come under Holyrood control in April 2015, following a substantial transfer of powers from Westminster under the Scotland Act.

Under his “progressive” plans, people looking to buy houses priced more than about £325,000 will pay more tax than they currently would under the Stamp Duty system.

Those buying property under that level would pay less duty than under the current system, while those looking to buy a home worth £180,000 or less would be exempt from paying the new tax altogether – a move to encourage first-time buyers.

[TheCountOfNowhere]

Scotsman.com

Might as well rent houses over the £325K now, expecially if you like to move every 5 years.

This should help kill the top end of the Scottish property market stone dead.

[pyracantha]

This should help kill the top end of the Scottish property market stone dead.

Bring it on.

[Executive Sadman]

The new system will differ in that property buyers will only have to pay tax on the portion of the price above the threshold.

Well at least some common sense there.

[Executive Sadman]

Pretty useless article though. As far as I can tell skimming it over it doesnt mention what the rate will be above £325k.

[Habeas Domus]

I imagine this will increase the number of larger houses being split up into flats

Those who can afford to buy a property of over £2m have to pay 7 per cent Stamp Duty. Thats £140,000 on a 2 million house.

It may actually pay to split a house in 2 - sell it as 2 separate lots (below the 7% band) and then the buyer could put everything back the way it was.

I suppose it will give the building trade something to do.

[abroad]

Doesn't fix the situation that wages are detached from house prices. Only those with an inflated house can afford another inflated house, its like a wee club.

[Ohmyword]

Sorry to resurrect an old thread, but I notice that John Swinney has announced in the Scottish Draft Budget today (16 Dec 2015) that he will mirror the 3% stamp duty surcharge on buy-to-let and second homes with an equivalent supplement on LBTT (from April 2016). Of course, the Scottish LBTT bands are different, so whereas buyers of BTL in E&W will be paying 8% on anything from £250k to £925k, buyers in Scotland will be paying 8% on anything above £250k, 10% on anything above £325k and 15% on anything above £750k.

[Ohmyword]

Or rather, 13% on anything above £325k and 15% on anything above £750k. Apologies. In somewhere like Edinburgh £325k is not a particularly high threshold, although of course you only pay the higher rates on the potion of the purchase price above £325k.

[ccc]

Thanks for the update. 145k is the threshold in Scotland compared to 125 in England and Wales I think ?

[Ohmyword]

Yes, that's right. In E&W 2% stamp duty kicks in at £125k - £250k. In Scotland 2% LBTT kicks in slightly higher at £145 - £250k. Below those levels it is 0% in both jurisdictions. For BTL, however, you pay 3% LBTT on £0 - £145k, 5% on £145k - £250k, and the rates described above thereafter.

What I find interesting is that the threshold at which the tax bill starts to ramp up exponentially is much lower in Scotland, although that of course reflects lower property prices in Scotland generally. If you are buying a £750,000 additional property, the LBTT bill will by my calculations be £68,750!

Presumably this will cool the market for all homes in Scotland after April 2016, but particularly pricier homes above, say £325k, by taking some potential BTL purchasers out of the equation, meaning less competition among buyers for such homes. What it will do to rents is hard to say. In theory it could eventually lead to rises as fewer BTLers enter the pricier end of the market and the supply of homes to rent reduces, but I doubt the effect will be significant. I also doubt that the market can bear significant rent rises anyway.