Scottish property tax revenues soar

Scottish property tax revenues soar

0:01 AM, 17th January 2024, About 5 months ago

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The Scottish Government collected more than £600m from property taxes in the last year, a leading property firm has revealed.

DJ Alexander Ltd, the country’s biggest lettings and estate agency, analysed the latest statistics and found that Land and Buildings Transaction Tax (LBTT) and Additional Dwelling Supplement (ADS) revenues totalled £619.6m in the 12 months to December 2023.

This is slightly lower than the previous year, when £623.1m was collected, but much higher than the pre-pandemic level of £395.6m in 2019.

ADS, which is a 4% surcharge on second homes and buy to let properties, accounted for £196.9m or 31.8% of the total, up from £152.9m or 24.5% in 2022.

Subject to a 10% LBTT rate

The bulk of the tax revenues came from properties sold for more than £325,001, which are subject to a 10% LBTT rate with 16,430 transactions above this threshold.

That meant that £350.5m or 82.9% of the total £422.7m was raised in LBTT – excluding ADS – and the average tax paid per transaction was £21,332.

David Alexander, the chief executive of DJ Alexander, said: “The pandemic has driven up property prices in Scotland significantly.

“From March 2020 to September 2023, the average house price across Scotland increased by £41,492 or 27.5% to reach £192,117, which is an extraordinary rate of growth.”

He added: “As a result, property buyers are paying much more in tax than they did three and a half years ago. But most of this income depends on a few thousand buyers who paid, on average, over £20,000 to buy a home in Scotland worth more than £325,001.”

Contrasted this with the situation in England

Mr Alexander contrasted this with the situation in England, where the 10% tax rate does not apply until the property value exceeds £925,000, and the 12% rate does not kick in until £1.5m.

In Scotland, the 12% rate starts at £750,000.

He said: “It is clear that Scottish homebuyers are paying considerably more in tax for the privilege of owning a home north of the border.”

He also noted the increase in purchases by investors, landlords and second homeowners, who pay the ADS on top of the LBTT.

Mr Alexander said: “Given the punitively high taxation paid by this group of buyers, it is testament to their resilience and belief in the Scottish market that they are buying properties in ever larger numbers because they want to invest in the private rented sector, or they wish to have a second home here.

“Either way, they are contributing substantial levels of tax to the Scottish purse and should be encouraged to invest more in the future.”

Criticised the LBTT and the Stamp Duty Land Tax (SDLT)

He criticised the LBTT and the Stamp Duty Land Tax (SDLT) in England as ‘a simple cash grab for governments’.

Mr Alexander said: “You can’t hide a home, so buyers simply have to pay up or move to somewhere where the purchase costs are not quite as punitive.

“If Scotland is to be seen as a progressive country wanting to attract the brightest and the best, then we must ensure we have a property tax regime which is at least as fair and as competitive as our nearest neighbour.

“At present, we risk putting off buyers, investors, landlords and second homeowners with a much more punitive tax take.”

He added: “We must have a tax system that supports the housing market, not stifles it.”


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