Committee
Finance and Public Administration Committee 03 February 2026
03 Feb 2026 · S6 · Finance and Public Administration Committee
Item of business
Subordinate Legislation
Land and Buildings Transaction Tax (Co-ownership Authorised Contractual Schemes) (Scotland) Regulations 2026 [Draft]
The structure of these transactions is such that individual investors own part of an entity that then owns the property. Therefore, if individual investors are moving in and out of that entity, the purpose is clearly not to be able to tax those transactions. The issue is about when the ownership of the property itself is transferred.The material impact is that those transactions are not taking place in Scotland, which means that investment is not happening. There is a different structure with stamp duty down south, but the effect of it is the same as what we are proposing here, which is that those transactions should not be liable to tax. That obviously creates an environment where it is more advantageous to make those investments south of the border.There is no tax lost at the moment with those transactions, because they are, in effect, not taking place.
In the same item of business
The Convener (Kenneth Gibson)
SNP
Good morning, and welcome to the fifth meeting in 2026 of the Finance and Public Administration Committee. We have three pieces of subordinate legislation to...
The Minister for Public Finance (Ivan McKee)
SNP
Absolutely. Good morning. I am delighted to be back.The Land and Buildings Transaction Tax (Co-ownership Authorised Contractual Schemes) (Scotland) Regulatio...
The Convener
SNP
Thank you for that brief but helpful opening statement.You touched on the fact that the instrument aims to“ensure that transactions do not give rise to a tax...
Ivan McKee
SNP
The structure of these transactions is such that individual investors own part of an entity that then owns the property. Therefore, if individual investors a...
The Convener
SNP
If this statutory instrument does not pass, there would be a disincentive to invest in Scotland. Is that what you are saying?
Ivan McKee
SNP
It removes a disincentive to invest in Scotland.
The Convener
SNP
Do you have an idea of what level of disincentive we are talking about?
Ivan McKee
SNP
We do not know, because obviously no transactions are happening at the moment. The Scottish Fiscal Commission has said that it is below the materiality thres...
The Convener
SNP
Are you expecting a boost in investment if this is implemented?
Ivan McKee
SNP
My officials might have more to say on that, but I will be honest and say that I do not expect that it will be a huge boost. It is, however, an exercise that...
John Mason (Glasgow Shettleston) (Ind)
Ind
I wonder whether there could be a loophole here for people to avoid tax. If the land was owned by A and B and, separately, A sold to C, and B sold to D, ther...
Ivan McKee
SNP
These schemes are regulated by the Financial Conduct Authority. It is a strict process to be identified as such. I understand what Mr Mason is saying, but I ...
Laura Parker (Scottish Government)
To clarify, the initial acquisition of property into the fund is still subject to LBTT, even when the exemption is in place. It is about the transfer of exis...
John Mason
Ind
The fund is still there, but it could be owned by completely different people and there would be no tax. Is that right?
Laura Parker
The way that the funds are set out is that there is the fund manager and the fund depository, which is an independent entity that manages the assets on behal...
John Mason
Ind
If the convener and I were to set up a fund and buy some land, and then we both sold to Mr Harvie and Ms Smith, no tax would be payable because the fund woul...
Laura Parker
No. If you sold the asset outwith the fund—
John Mason
Ind
No. I am saying that you would be selling the units in the fund, not the asset.
Ivan McKee
SNP
You would have to get it FCA approved, Mr Mason.
John Mason
Ind
Okay. I will not pursue that any further.
The Convener
SNP
I think that you should have a good go, if I am honest.
Patrick Harvie (Glasgow) (Green)
Green
Good morning. I am still a wee bit unclear about the purpose of all this.I understand from the policy note what the Government’s policy is, but I do not unde...
Ivan McKee
SNP
They would still pay tax if they were transferring the asset out of the fund. The fund is the entity that owns the property, as any other investment vehicle ...
Patrick Harvie
Green
It still sounds as though we are talking about dressing up a property investment as a financial investment. What is the purpose of it?
Ivan McKee
SNP
The purpose is to attract more investment into Scotland in relation to property.
Patrick Harvie
Green
You could do that by exempting lots of people from paying their taxes.
Ivan McKee
SNP
It is to do with the structure of those funds. The individual is buying not the property itself but a unit share in a fund that is then buying the property.
Patrick Harvie
Green
Thank you.
The Convener
SNP
Item 2 is our formal consideration of the motion on the instrument. I invite the minister to speak to and move motion S6M-20588.Motion moved,That the Finance...
The Convener
SNP
Would you like to speak to the motion, minister?