Meeting of the Parliament 06 March 2018
The title of the bill may prove to be almost as long as the time that is taken to consider and approve it. As the cabinet secretary, the convener and members have reminded us, the Land and Buildings Transaction Tax (Relief from Additional Amount) (Scotland) Bill seeks to correct an unintended consequence of the Land and Buildings Transaction Tax (Scotland) Act 2013.
When LBTT tax replaced SDLT in Scotland in 2015, a percentage of the value of the house, which varies depending on that value, became payable in tax. In 2016, the ADS came in, and its purpose was to charge an additional 3 per cent of the value of the house if it was a second home. The intention was that the ADS would apply if one spouse owned an existing home and their spouse bought a second home, but that it would not apply if the buyer was replacing their original home. Of course, the unintended consequence was that certain couples who bought another house, replacing their original home, were still being charged the ADS because the name of only one spouse was on the title to the first house. That was not the policy intention behind the ADS. It is hugely important that, as a Parliament, we listen when well-meaning action that we take can be improved and that we act accordingly. The bill simply seeks to correct that problem and to allow a retrospective claim to be made for the return of the ADS in such cases.
The financial memorandum that accompanies this short bill estimates a likely increase of somewhere between 2 and 5 per cent in the number of joint buyers intending to claim back the tax, provided, of course, that they are able to dispose of the original property within 18 months. On average, the value of each ADS transaction is thought to be around £8,000. As James Kelly pointed out a moment ago, the overall cost is estimated to be somewhere between £600,000 and £1.5 million, which I understand is to be met from within existing resources. The bill will not therefore have a huge impact on the Scottish budget. No doubt, the measure will be welcomed by those who are affected by it.
In terms of the overall impact of the land and buildings transaction tax and its performance, more than 90 per cent of home buyers pay less tax or no tax at all compared with the situation under the predecessor stamp duty land tax. Further, it has helped to keep more than 25,000 houses out of tax altogether by setting a threshold of £145,000, which means that there is no charge until that figure is reached.
We ought to welcome the progress that has been made through the LBTT as it involves home buyers paying a fairer amount of tax and gives them a helping hand by saving them money. At the upper end of the market, data from Revenue Scotland tells us that house sales are continuing to rise annually by about 18 per cent, and the Scottish Government is committed to monitoring the performance of the tax across all the bands. I note the cabinet secretary’s announcement that the Government intends to consult on group relief, which is an issue that was raised by quite a number of stakeholders.
The bill is a welcome correction to an unforeseen effect that unintentionally but unfairly taxed some house purchasers. It addresses that and will allow those house buyers to reclaim the tax that they paid on the purchase of their house. I support the Scottish Government’s motion.
16:36