Scottish Budget: First-time Buyer Relief Continued But LBTT Holiday Will End

30th January 2021

Scottish Housing News.

Relief for first-time buyers, which raises the nil rate band for LBTT to £175,000, has been extended, while the ceiling of the nil rate band for residential land and buildings transaction tax (LBTT) will return to £145,000 from April 1, finance secretary Kate Forbes confirmed as part of the Scottish Budget yesterday.

The continued relief is calculated to result in a reduction of tax of up to £600 first-time buyers.

Elsewhere, the non-domestic rates tax rate has been reduced mid-revaluation from 49.8 to 49 pence saving ratepayers more than £120 million and delivering the lowest poundage in the UK. And to deliver "stability and certainty" from the tax system, there will be no changes to income tax rates this year.

During her Budget statement, Ms Forbes also set out plans to:

increase the starter band, basic band and higher rate threshold of income tax by inflation

freeze the top rate threshold of income tax in cash terms at £150,000

increase the standard rate of Scottish landfill tax to £96.70 per tonne and the lower rate to £3.10 per tonne to ensure consistency with planned landfill tax charges in the rest of the UK.

Ms Forbes said: "This Budget is focused on delivering tax policies that will support economic recovery and maintain our commitment to creating a fairer and more progressive tax system. It is about striking the right balance between raising the revenue required to fund our public services and supporting the economic recovery through targeted interventions.

"This includes using the rates relief handed back by businesses to help fund a three month 100% rates relief extension for the sectors that have been hardest hit by the pandemic.

“Should the UK Government bring forward an extension to its equivalent rates relief that generates consequential funding, we will match the extension period as part of a tailored package of business support measures.

“During this time, it is vital that we also continue to support households and families. That is why I have ensured that no Scottish taxpayer will pay more income tax in 2021-22 than they do now on their current income and, for a fourth consecutive year, more than half of Scottish income taxpayers will pay less tax than if they lived anywhere else in the UK.

“In recognition of the increasing pressures on many family budgets, I am also providing local councils with £90m on top of their settlement of £11.6 billion to freeze the council tax. This will ensure that while council tax bills won't go up, there will be no impact on vital local services.

“Now is a time for stability, certainty and targeted support for the individuals and businesses who have been most impacted by the pandemic and our tax policy delivers this."

David Alexander, joint chief executive officer of property firm apropos by DJ Alexander, said the finance minister has missed a trick in failing to extend the LBTT holiday beyond March.

Mr Alexander believes that extending the term of the threshold would have sent a clear signal that the Scottish Government wanted to continue to support homebuyers by encouraging the strong recent growth in the property market in Scotland.

In addition, this would have also raised much needed funds as the latest Scottish Government's' figures reveal that revenue from residential LBTT increased from £119.1 million in the last quarter of 2019 to £157.3m in the last three months of 2020. In December alone LBTT revenues were £60.2m from 13,580 residential transactions which was the highest ever recorded monthly figure.

Read the full article HERE