John Swinney, SNP Finance Minster, has announced new plans to replace Stamp Duty with a new Land and Buildings Transaction Tax (LBTT).
This new tax will charge 10% of the purchase price on properties worth between £250,001 and £1 million and 12 % on anything above that.
The figures released by the Scottish government show that the public would be paying more tax than at the moment on properties worth £325,000 - less than the average cost of a four bedroom house in Edinburgh.
Conversely anyone buying a property for less than £325,000 will be in the same position or, sometimes, significantly better off. Currently the average house price in Scotland is £145,771 so most households should be positively affected when compared to the previous system.
Nevertheless David Marshall, ESPC’s business development manager, said £325,000 “does not get you a lot” in Edinburgh and noted that many people buying homes costing more than that have equity in the properties they are selling but are not “cash rich.”
There has been further criticism from newspapers such as the Telegraph that the new taxes are going to cost too much money, claiming that “the ‘squeezed middle’ will pay millions of pounds more than the ‘super rich’". However, the Finance Minister claimed that up to 90% of all house buyers would be no worse off, with first time buyers benefitting the most, despite protestations from the Conservatives that the new taxes were an “assault on aspiration.”
Other opponents to the tax have suggested that a “fairer approach would have been to introduce more bandings, instead of imposing an identical 10% on properties that vary in value by £750,000.”
Buyers currently pay no Stamp Duty on purchases below £125,000 but 1% on the entire purchase price if it is between £125,001 and £250,000 and 3% cent of the entire cost if it is between £250,001 and £500,000. There are three more bands, with the highest being 7% for purchases of more than £2 million.
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