The Land and Buildings Transaction Tax (Scotland) Act 2013 (?LBTT Act?) might not sound exciting, but as the first tax Act to be passed by a Scottish Parliament in over 300 years it is certainly noteworthy for those with an interest in Scottish residential or commercial property.
Land and Buildings Transaction Tax (?LBTT?) is one of two areas of taxation over which the Scottish Parliament has derived legislative competence from the Scotland Act 2012, the other being Landfill Tax. It is intended that LBTT replace the existing UK Stamp Duty Land Tax (SDLT) in Scotland from 1 April 2015, notwithstanding the result of the independence referendum on 18 September (which, if resulting in a ?Yes? vote, would of course lead to full array of taxation powers being passed to the Scottish Parliament).
A consultation on the draft subordinate legislation required to introduce LBTT in Scotland may be found here and responses can be submitted by interested parties up until Friday 25 July 2014.
Whilst it is anticipated that LBTT will follow the system put in place by the current acronym SDLT relatively closely, the new legislation will allow subtle changes to be made to the existing system to align the tax more closely with Scots law and practice. It is possible that LBTT will see a move away from the ?slab? system of SDLT towards a more progressive tax structure, avoiding the current spike in property purchases immediately below ?250,000 where the SDLT rate (on the whole purchase price) changes from 1% to 3%.
Minor changes to the list of exemptions may be proposed during the consultation process, however, it appears likely that key elements of the existing SDLT regime ? such as multiple dwellings relief and an exemption for property and land purchased by charities ? will remain in place under the new Scottish system. It can also be assumed that Registered Social Landlords will continue to benefit from relief from LBTT, as they currently do from SDLT.
It is anticipated that the proposed tax rates and bands that will apply under LBTT will be announced towards the end of 2014 as part of the draft Budget. ?It will be interesting to see how these vary, if at all, from the current SDLT rates and bands, which will continue to apply in the rest of the UK after the introduction of LBTT in Scotland.
If you wish guidance on purchasing property in Scotland or require specific advice on Stamp Duty Land Tax or Land and Buildings Transaction Tax please contact our property or commercial property team.