A new tax has come into force changing the way Scottish home buyers pay duty on property.
The Land and Buildings Transaction Tax (LBTT) came into force yesterday (Wednesday April 1). It is the first tax introduced by a Scottish Parliament in more than 300 years notes bbc.co.uk. Replacing the UK stamp duty it will change the way people pay duty on house purchases.
Brought in under new devolved powers thanks to the Scotland Act 2012, the system uses a graduated tax rate in a similar way to income tax. The Scottish government has said that nine out of 10 tax payers will be no better or worse off under the new rules.
Despite this the change has prompted a flurry of business for estate agents over the past few weeks, as upmarket property owners rushed to sell houses ahead of the April 1 deadline reports scotsman.com.
Under the new system buyers will pay no tax for properties under £145,000, this is 25,000 higher than the UK stamp duty threshold. Properties worth between £145,000 and £250,000 will attract a tax rate of 2 per cent, whilst sales between £250,001 and £325,000 will see a new rate of 5 per cent.
The higher rate of tax only comes into force for properties worth over £325,000; buyers will pay 10 per cent tax in this bracket, up to £750,000. The top rate of 12 per cent applies to properties over this value and it is these top two brackets which have seen a rush in sales.
The rest of the UK will continue to operate under the reformed stamp duty introduced by Chancellor George Osborne last year. For Scotland, the new rate differs from the former ‘slab’ structure of stamp duty; meaning a buyer will only pay on a portion of the total value that falls within each band.
It’s thought that half of all household transaction will fall under the no-tax bracket according to Finance Secretary John Swinney, who noted that more than 40,000 people will pay less for a new home under the new tax rate.