THE majority of Scotland's housebuyers will pay less tax on their new properties after Finance Secretary John Swinney unveiled his replacement for stamp duty in an attempt to kickstart the housing market and help more young people become homeowners.
Mr Swinney plans to wipe out the 1% tax for properties valued at less than £180,000, in a move designed to make it easier for people to get on the property ladder. He also plans to decrease the charge for sales below £325,000.
The move was backed by estate agents as the kind of help the market desperately needs at a time when many young people are finding it difficult to get mortgages.
Mr Swinney revealed his plans to MSPs yesterday as he announced a consultation on the Land and Buildings Transaction Tax, which will replace stamp duty in 2015.
He said the Scottish Government's preference was for "a move from the UK's slab tax approach to a progressive system of taxation where the amount paid is more closely related to the value of the property and therefore to the ability of the individual to pay".
Mr Swinney said the consultation indicated a willingness to adjust the threshold at which taxation was levied in order to support people at the lowest end of the market. He added that the proposals were "revenue-neutral".
Stamp duty currently applies to the sale of land or property over £125,000. Wiping out the 1% figure on a property which sold for £170,000 would save the buyer £1700.
He said his proposals to decrease tax on properties under £325,000 would bring benefits to around 95% of the property market, or 66,500 residential sales a year.
"Those buying property at higher values would, of course, pay more," he added.
Tory finance spokesman Gavin Brown said: "Anyone who understands mathematics will know that if 95% are winning, then the other 5% would have to be losing pretty badly to make it add up."
The new property tax is part of a package of measures including the creation of a tax-collecting agency, Revenue Scotland, and a new landfill charge set out by Mr Swinney in what he said was "the first step toward the setting and collecting of taxes in Scotland and to doing so better and at less cost than the UK Government".
Labour spokesman Ken Macintosh claimed it was a "rushed announcement" that lacked detail and did not answer basic questions.
He added: "The SNP tell us very little about how much tax they want Scots to pay but expound at length on why we need a separate tartan taxman."
Mr Swinney said the Government had already engaged with bodies including the Scottish Property Federation, the Council of Mortgage Lenders and the Law Society of Scotland.
Taxpayers will be involved in the plans through a tax consultation forum.
Carolyn Campbell, of estate agent Strutt & Parker, said: "This announcement suggests a much
fairer correlation between the amount of tax paid and the value of the property, which will prove positive for prospective buyers.
"Stamp duty is a prominent consideration for buyers and many are amazed by how much they have to pay. We are asked questions about it, often incredulously, almost every day. Anything that can be done to soften that blow will help."
Bob Cherry, head of CKD Galbraith's residential division, said: "It jumps from 1% to 3% at the £250,000 threshold so lots of properties are sold around that price because of that.
"This will hopefully allow people to consider a more expensive property.
"Anything like this which reduces stamp duty will have a positive effect on the market, albeit not a huge one."
However, Faisal Choudhry, of Savills, said: "The majority of transactions in Scotland take place below the £180,000 mark so this will effect a lot of buyers, but in terms of stimulating the market, I think more needs to be done in mortgage availability.
"Stamp duty is only paid when the transaction is complete and many people can't even get to that point because they can't get a mortgage or afford a deposit. Fewer and fewer people are applying for mortgages."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article