SCOTLAND has used its new-found tax autonomy to set its own rate of stamp duty land tax, and land and buildings transaction tax, from April 2015.
The new rates, the first to be introduced in Scotland in 307 years, will only be payable on the portion of the total value which falls within each band.
The rates will take 5,000 additional house purchases out of tax by ensuring that nobody will pay tax on the first £135,000 of their house purchase – £10,000 higher than the current stamp duty threshold.
As a result, no tax will be payable on 45% per cent of transactions, reducing the tax charge relative to stamp duty for a further 44,000 house purchases up to £325,000 and ensuring that 90% of homebuyers will either pay less or the same amount as they would under current arrangements.
The two devolved taxes will be collected by Revenue Scotland and are expected to bring in an estimated £558m in 2015/16.
Financial secretary John Swinney the old stamp duty was “outdated, causing unfair tax hikes”, and “led to the market being distorted and led people to try to avoid tax”.
The abolition of the “slab” system of taxation brought in with the changes was welcomed by the institutes. Chairwoman of the CIoT’s Scottish taxes committee, Moira Kelly, said the power to set rates would “remove the cliff edges” created by market fluctuations.
She said: “Under the current system someone buying a property for £125,000 pays no tax while someone buying a property for £125,001 pays £1,250; someone buying a property for £250,000 pays £2,500 in tax while someone buying a property for £250,001 pays three times as much. That has created huge incentives to ‘game the system’ over the years by claiming exaggerated values for fixtures and fittings. All those involved in Scottish property sales should be relieved to see the back of that crazy system.”
ICAS private clients and small business head of taxation Charlotte Barbour said: “These are interesting times in Scotland, with the two new devolved taxes applying from April 2015 and especially as we look ahead to 2016, when the Scottish parliament will have greater control over income tax with its Scottish rate of income tax.
Crowe Clark Whitehill , the top 20 accountancy firm, has announced the promotion of Chris Mould to partner
HMRC is continuing to ramp up the number of raids on premises it carries out as part of criminal investigations, searching 761 properties in the last year
The latest opinions from Accountancy Age on Making Tax Digital, and outline plans to evolve the UK's corporate governance regime
Five million taxpayers are ow using digital personal tax accounts (PTA) as part of the making tax digital strategy, HMRC said