Latest news with #LBTT
Scotsman
2 days ago
- Business
- Scotsman
Property Tax: Rachel Reeves eyes new Stamp Duty shake-up
New plans could soon mean selling your home leaves you with less in your pocket 🏡 Sign up to the weekly Cost Of Living newsletter. Saving tips, deals and money hacks. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... Chancellor Rachel Reeves is considering replacing stamp duty with a new tax on home sales Homeowners selling properties worth over £500,000 could face a levy, instead of buyers paying upfront stamp duty A £600,000 home sale could mean a tax bill of around £3,240; £1.2m could cost about £8,500 The plan is aimed at easing costs for buyers, particularly first-time buyers, and could pave the way for wider council tax reform Any changes would be announced in the Autumn Budget, expected in late October or early November 2025 Selling your home could soon come with a new tax bill attached, as the Treasury weighs up a radical overhaul of the way property is taxed in the UK. According to reports, Chancellor Rachel Reeves is 'looking at' scrapping the existing stamp duty system – where buyers pay a levy when purchasing property – and replacing it with a tax on sellers of homes worth more than £500,000. Advertisement Hide Ad Advertisement Hide Ad Currently, stamp duty kicks in on properties costing over £125,000, with buyers footing the bill Under the proposals being considered, this responsibility would shift to homeowners, who would pay a government-set rate when they sell up – but only if their property is worth above the £500,000 threshold. Chancellor of the Exchequer Rachel Reeves during a visit to Studio Ulster on August 12, 2025 in Belfast, Northern Ireland (Photo: Oliver McVeigh - Pool/Getty Images) | Getty Images What could change? Details remain under discussion, but one model floated by former government adviser Tim Leunig would see a levy of 0.54% on the sale price of homes over £500,000, plus a 0.278% supplement on values above £1 million. That would mean: Selling a £600,000 home could cost you around £3,240. A £1.2 million sale could trigger a tax bill of around £8,500. This would replace stamp duty for buyers of owner-occupied homes. Second homes and buy-to-lets, however, may remain under a separate system. Advertisement Hide Ad Advertisement Hide Ad If Rachel Reeves pushes ahead, homeowners and buyers in England and NI would be directly affected. But Scotland uses the Land and Buildings Transaction Tax (LBTT), and so changes wouldn't apply there unless the Scottish Government decided to introduce similar reforms to LBTT. Why is this being considered? The move would aim to make it easier for people to buy their first home, by removing one of the biggest upfront costs of moving. Advertisement Hide Ad Advertisement Hide Ad It could also create a model for broader reform, with the possibility of replacing council tax with a property-based levy in the medium term. The Treasury insists no decision has yet been made. A spokesperson said the focus remains on 'growing the economy' and keeping taxes on working people 'as low as possible', pointing to existing pledges not to raise income tax, national insurance, or VAT. What does it mean for you? If you own a home worth more than £500,000, this change could mean factoring in a tax bill when you eventually sell. While the rate looks lower than stamp duty on equivalent purchases today, sellers may feel the sting of losing a chunk of their proceeds. Buyers, meanwhile, could find moving less expensive, especially first-timers, who often struggle to save for both a deposit and stamp duty. Advertisement Hide Ad Advertisement Hide Ad When is the Autumn Budget? Reeves is expected to outline any concrete tax changes at a future Budget. The Autumn Budget 2025 has not been officially scheduled yet, but following tradition, it is most likely to be delivered in late October or early November 2025. It is broadly expected to fall between October 28 and November 4. For now, homeowners and buyers alike will be watching closely, as this shift could reshape one of the biggest financial transactions of our lives.
Daily Record
2 days ago
- Business
- Daily Record
The key differences between Property Tax and Stamp Duty as UK Gov considers changes
Stamp duty used to exist in Scotland but has since been replaced with another fully devolved tax Buying a home or property comes with so many new words and phrases to get your head around. The terminology can be overwhelming and confusing and can leave Brits struggling to separate their deeds from their deposits. This is where property tax and stamp duty come in. This week, it was announced that the Treasury is considering plans to raise money from a tax on the sale of homes worth more than £500,000 in England, according to reports. Government officials are looking at a potential national property tax, which would replace stamp duty on owner-occupied homes, The Guardian reports. Stamp duty would still apply for second homes. So, what is the difference between property tax and stamp duty? UK property tax is a complicated mixture of things depending on whether you're a homeowner, a landlord, if you've inherited property and the size of your home. Stamp duty is the tax you pay the government on any home or land bought in England or Northern Ireland. Scotland and Wales have their own systems. If you're buying a home in Scotland that costs more than £145,000, or £40,000 if it's a second home, you'll pay Land and Buildings Transaction Tax (LBTT), which is the Scottish equivalent of Stamp Duty. It's a fully devolved tax and the Scottish Government makes decisions about and sets LBTT rates. For that reason, announcements made by the UK Government about stamp duty do not apply in Scotland. For buyers changing homes, any home in Scotland over the value of £145,001 (£125,000 in England and £180,001 in Wales) will require a payment. If it's an additional home that you're purchasing, you'll pay an even higher percentage of stamp duty – usually an additional three per cent on top of the standard payment. Most people will know it as the tax they may pay when buying a house, but it also applies to non-residential purchases and leases. Any changes to LBTT rates and bands are considered as part of the yearly Scottish Budget and must be approved by the Scottish Parliament. LBTT is administered and collected by Revenue Scotland. How much you pay depends on the type and value of the property, so if you are buying a house to live in, a second home or a commercial property. Support is available for first-time buyers in the form of first-time buyer relief. Wondering how much you pay? You can use the LBTT calculator on Revenue Scotland's website to work out how much tax you may need to pay on a property. You can also get information on rates, bands and how to pay LBTT. The new proposed property tax, as it is for homes over £500,000, would only impact around a fifth of property sales, compared to the current 60 per cent. The UK Government believes the new levy would offer a more consistent source of revenue, while raising a similar amount. If you live in the UK there is also some annual property tax in the form of council tax. Council Tax is a local tax that helps to pay for local services such as rubbish collection, roads and local area maintenance. Join the Daily Record WhatsApp community! Get the latest news sent straight to your messages by joining our WhatsApp community today. You'll receive daily updates on breaking news as well as the top headlines across Scotland. No one will be able to see who is signed up and no one can send messages except the Daily Record team. All you have to do is click here if you're on mobile, select 'Join Community' and you're in! If you're on a desktop, simply scan the QR code above with your phone and click 'Join Community'. We also treat our community members to special offers, promotions, and adverts from us and our partners. If you don't like our community, you can check out any time you like. To leave our community click on the name at the top of your screen and choose 'exit group'. If you're curious, you can read our Privacy Notice. You pay it directly to your local council. For most homes in Scotland, Council Tax is billed alongside water and waste charges from Scottish Water. Water charges help to pay for providing clean water and maintaining the sewerage system. The rate of council tax you pay depends on the size of the home you live in and the council where you live. You'll usually have to pay Council Tax for the home you live in if you're 18 or over. You may also have to pay Council Tax on any empty property that you own, including second homes. A full Council Tax bill is based on at least two adults living in a home. You can apply for a discount if you're the only adult living in your home. Other taxes that relate to homes in this country are usually payable either when you're buying, selling or inheriting a property. If you are renting a home as a buy-to-let, the amount of income you make will be taxable each year, so what you pay in tax will depend on your earnings.
Scotsman
3 days ago
- Business
- Scotsman
How Scotland's affordable homes budget is bankrolled by buyers
David J Alexander says LBTT figures show the private sector is effectively funding a huge chunk of Scottish housing policy Sign up to our Scotsman Money newsletter, covering all you need to know to help manage your money. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... Homebuyers, landlords, property investors, and second homeowners should give themselves a round of applause. The latest figures show that these are the people paying property taxes which are now equivalent to the entire affordable housing budget allocated by the Scottish Government. These people – from the first-time buyer to the million-pound property owner – have supplied £714.2m through land and buildings transaction tax (LBTT) over the latest year from August 2024 to July 2025. This total is £110m higher than the previous 12-month period, when £604.2m was raised. Advertisement Hide Ad Advertisement Hide Ad Whether revenue from LBTT is directly transferred to affordable housing is unknown but private buyers are now effectively funding a huge chunk of Scottish housing policy. The land and buildings transaction tax has raised £714.2m over the last 12 months (Picture: John Devlin) Last month recorded the highest ever figure for LBTT of £80.3m: the highest ever monthly charge from the additional dwelling supplement (ADS) paid by landlords, property investors and second home buyers at £28m; as well as the highest ever contribution from ordinary homebuyers with £52.3m. Almost all the residential taxes raised came from properties sold for more than £325,001. The 19,560 transactions above this threshold collected £388.8m, which is 78.9 per cent of the total £493m raised in LBTT (this is the figure for residential sales with the ADS figures removed). This means that the average tax levied per transaction was £19,877. Does anyone really believe that someone buying a property worth £325,001 is 'rich' and able to subsidise the rest of the Scottish economy? Are these really the people in Scotland with the broadest shoulders? Advertisement Hide Ad Advertisement Hide Ad Meanwhile, landlords and property investors, while often vilified by politicians and others as the cause of the current housing emergency, paid £221.3m, which was almost a third of the LBTT total for the last year. This is a clear indication of just how crucial this group is in providing homes and substantial tax funding. David J Alexander is CEO of DJ Alexander Scotland Ltd (Picture: Laurence Winram) But it is questionable whether this is a sustainable, or even sensible, means of raising revenue. The Institute for Fiscal Studies (IFS) specifically criticised the policy this year stating that: 'Scotland's increase in the surcharge in land and buildings transaction tax (LBTT) on the purchase of second and rental homes, from 6 per cent to 8 per cent… continued a trend of increases in this 'additional dwelling supplement'', and 'the move makes an already highly economically damaging tax even worse'. It continued: 'It is not yet clear what the Scottish Government's vision for tax policy is – but increases to LBTT are not consistent with any economically sensible strategy.' The IFS, and many private investors, understands that the current LBTT policy is simply political posturing which makes little or no economic sense but plays up to the idea that punishing 'the rich' is the way forward. While these figures indicate just how resilient and lively the Scottish property market remains there needs to be a level playing field with our UK counterparts. We need – as the IFS and others point out – a proper tax strategy in which there is a reasonable explanation of why these taxes are so high and what benefits accrue from them. Regardless of the current market buoyancy there is little doubt that continued higher property and income taxes will start to deter individuals and companies from future investments in Scotland if this situation is not addressed.
Scotsman
03-07-2025
- Business
- Scotsman
Unhappy anniversary for the transaction tax that targets homebuyers
David J Alexander says the LBBT's tenth birthday was no cause for celebration as it raked in £61m in a single month Sign up to our Scotsman Money newsletter, covering all you need to know to help manage your money. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... The land and buildings transaction tax (LBTT) celebrated its tenth anniversary this April by collecting tens of millions of pounds in Scottish taxpayers' money. Started in 2015 the revenue from this property tax reached an eye-watering £61m in one month. This huge amount was received in April 2025 from 8,100 transactions, which is equivalent to £7,530 per property sold. Back in April 2015 there were 6,880 transactions and just £7m was collected, which is equivalent to just £1,017 per sale. Advertisement Hide Ad Advertisement Hide Ad This is a 750 per cent rise in a decade. Are there any other taxes or prices which have risen by so much in such a short space of time? Obviously not, but this doesn't seem to deter the Scottish Government, which believes that this tax hits those with the broadest shoulders. This is defined as those who buy a property with a value greater than £325,001 when the ten per cent LBTT rate applies. In England, this higher rate does not kick in until a property is worth more than £925,000. David J Alexander is CEO of DJ Alexander Scotland Ltd (Picture: Laurence Winram) With the average price of a property in East Renfrewshire now £302,052 and Edinburgh, East Lothian and Midlothian not far behind we are in a position where many more people – who would never consider themselves to be wealthy – will be hit by the much higher levels of property tax levied in Scotland. But it's not just those buying a £325,001 home who have the broadest shoulders and must pay more. First-time buyers (FTBs) in Scotland are also treated to higher taxes than their English counterparts. In Scotland LBTT starts at £175,000 for FTBs whereas in England they don't start paying property tax until a home costs more than £300,000. Ministers may argue that if you can afford to buy a £175,000 first home or a £325,000 property then you can afford to pay a higher rate of tax. It is doubtful, however, that this is a credible argument. What we have here is a tax which disproportionately punishes Scots homebuyers compared to their near neighbours. Advertisement Hide Ad Advertisement Hide Ad Those living on the Border must be particularly upset that they may know people a few miles away in Berwick upon Tweed or Carlisle who save thousands of pounds when buying their home simply because of a slight difference in geography. (Picture: John Devlin) The other element of this tax which galls so many is that this additional money is not put to any obvious homes-related use. If homebuyers could see some benefits from their generosity in paying these substantial additional sums, then they may be more accepting of this higher taxation. Instead, it all seems to disappear into an ever-expanding pot of government expenditure. Hypothecating this additional taxation directly into the housing sector could go some way to at least explaining why Scots – at all levels from first-time buyers to other home purchasers – are charged so much more for the fundamental right to have a home. At the moment there is little explanation of why this is occurring and what the money is being used for. Perhaps by the time of LBTT's 20th birthday we shall have a clearer explanation. In the meantime, we must simply pay a lor more for buying a home.
Daily Record
09-06-2025
- Business
- Daily Record
Dumfries and Galloway property market seeing increased activity and improved buyer confidence
The residential team at property consultants Galbraith handled 14 per cent more sales in the first three months of 2025 than the same quarter last year. A property consultancy claims there is improved buyer confidence and increased market activity in Dumfries and Galloway. The residential team at Galbraith handled 14 per cent more sales in the first three months of 2025 than the same quarter last year. Staff carried out 241 property viewings and 43 market appraisals, with transaction values ranging between £200,000 and £765,000. And the average percentage prices achieved were 3.5 per cent over the asking price. Partner and head of sales for Galbraith based in the Castle Douglas office, David Corrie, said: 'We have witnessed buyer confidence improving in the market due to falling interest rates and therefore mortgage rates coming down, allowing people to reengage and make a move. 'Spring time is a naturally active time of the year, spurred on by the favourable weather encouraging sellers to get their property ready for the summer market. 'There is an active second home market in Dumfries and Galloway and the increased Additional Dwelling Supplement (ADS), now up to eight per cent, is starting to have a ripple affect across the whole market. 'People are reassessing a second home purchase, particularly in the higher end of the market when increased levels of Land and Buildings Transaction Tax (LBTT) are also being paid, and consequently prices are being restricted. 'However, prices remain stable in the £200,000 to £400,000 market where properties with interesting features, a small portion of land or usable outbuildings remain in high demand. 'As such, there has been a number of successful sales completed at competitive closing dates where sensible pricing has been key. 'Buyers continue to be attracted to the area from the south as well as other parts of Scotland due to its accessibility from the central belt, the size and value for money and the semi-rural lifestyle on offer with stunning coastline and beautiful forest parks.'
