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Daily Record
38 minutes 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.
BBC News
6 days ago
- Business
- BBC News
What is Gers and how is it calculated
The Scottish government's latest Government Expenditure and Revenue Scotland (Gers) report has been annual report estimates the difference between what Scotland raises in taxation and what is spent on its public is known as the net fiscal balance, or some call it the "notional deficit". It found the difference in 2024-25 was £26.5bn, which was up from £21.4bn in the previous financial year. How did Gers come about and how has it been used? The Gers figures were first published in 1992 under UK Prime Minister John ministers in the UK government's Scottish Office thought it would help inform the debate on devolution - or would at least help them make the case against the establishment of a Scottish prices were low at the time and they thought the numbers would show how much more Scotland gained from the UK Treasury than it sent south in tax devolution in 1999, the figures have been compiled by the Scottish government but there is still an annual battle to interpret the numbers from either side in the independence the time of the independence referendum in 2014, the Scottish government's White Paper described Gers as "the authoritative publication on Scotland's public finances".The SNP's Growth Commission blueprint for the finances of an independent Scotland also accepted the Gers figures as its starting opponents of independence have used the figures to point to a "Union dividend" - arguing that Scotland can only afford its relatively high levels of public spending because it is part of the UK. Does Gers tell us what an independent Scotland would look like? No. The Gers figures are not meant to be anything other than a way of showing the current position under the present at the respected Fraser of Allander Institute say that Gers "presents a useful starting point for a discussion regarding the challenges and opportunities that Scotland would face".And BBC Scotland's economics editor Douglas Fraser says: "One way of looking at them is to measure how big Scotland's deficit would be, if the country were to have been both independent and if its public finances were performing exactly as they did within the UK."It would probably perform rather differently if Holyrood pulled the tax, spending and borrowing levers in different ways to the Treasury in London."It could have pulled those levers in a smarter way, or left a bigger deficit."Everything around this is contested. But what can be said is that this helps illustrate the health or weakness of Scottish public finances." How is Gers calculated? The Fraser of Allander Institute has tried to explain how Gers is compiled by Scottish government points out that data on the spending side of the equation is not estimated, but some UK spending is allocated to Scotland on a proportional total spend is made up of Scottish and local government services and welfare spending, as well as UK welfare spending and pensions in also includes UK government spending in non-devolved areas in Scotland such as defence, and allocates a proportion of the UK's debt interest payments to revenues, there have been complaints that the data used is not collected for Scotland and has to be estimated from UK can be tricky for North Sea oil and gas revenues, where the projects and the companies behind them are operating across both Scottish and English coastal waters. A version without North Sea oil and gas revenue is also produced as this is often volatile, distorting the overall picture, and is expected to decline over time. In recent years, the inclusion of Scottish income tax, council tax, business rates, the profits made by Scottish Water, landfill tax, land and building transactions tax and local authority user charges and fees have made this less of a problem. There are other revenues - particularly those collected by HMRC - where estimation is Fraser of Allander Institute says "estimates are not unusual in economic statistics".And the Scottish government says that Gers is "produced independently of Scottish ministers and has been assessed by the UK Statistics Authority as being produced in line with the Code of Practice for Official Statistics."This means the statistics have been found to meet user needs, to be methodologically sound, explained well and produced free of political interference."The Scottish government has published answers to a list of frequently asked questions about its Gers figures. How does Scotland compare to the rest of the UK? There are figures from the Office for National Statistics which provide a UK version of Gers, covering the regions of England as well as Scotland, Wales and Northern Ireland, though with a lot less detail. The most recent cover 2022-23, and show Scotland is not the spending per head, Scotland is second top to London. It can be expensive to get things done in the revenue raising, when Scotland was allocated its geographic share of oil and gas tax, it was third behind London and south-east England. It was ahead of England and the UK as a difference between revenue and expenditure, known as the net fiscal balance, suggests Scotland's notional deficit is bigger than most parts of the UK, but not as big as Wales, Yorkshire and Humberside, the West Midlands and, biggest of all, north-west London and south-east England raise more in tax than is spent there by government. Every year, there is redistribution of government funds out of the south-east and into the rest of the UK. The question then arises of whether it's sufficient.
