The Land and Buildings Transaction Tax (Scotland) Act (“the LBTT Act”) received Royal Assent on 31 July 2013. From 1 April 2015, LBTT will replace UK Stamp Duty Land Tax (“SDLT”) on land transactions in Scotland. Subject to parliamentary approval of the Revenue Scotland and Tax Powers Bill (“RSTPB”), currently before the Scottish Parliament, Revenue Scotland will become the tax authority responsible for the collection and management of LBTT.
The Scottish Government supports the property industry in Scotland and recognises the important role it plays in the Scottish economy. It also recognises that tax considerations, including liability for SDLT/LBTT, are among the factors taken into consideration by developers when acquiring land and buildings for development or redevelopment.
The Scottish Government has brought forward legislation to introduce a Land and Buildings Transaction Tax which would improve on SDLT in a number of areas, better aligning the legislation with Scots law and practices and ensuring appropriate reliefs and exemptions are applied. It has also made clear that it wishes to take all reasonable steps to reduce the risk of artificial avoidance of LBTT, to foster a climate of tax compliance, and thus help to safeguard public finances.
Against that background, the Scottish Government is seeking views as to whether the LBTT Act should be amended to allow relief from LBTT for one of the land transactions in a “sub-sale” where there is significant development or redevelopment of the land or buildings in question. While a broadly similar relief is available under SDLT at present, the proposal under consultation in respect of LBTT is that the relief would be available only where significant development has been completed within 5 years of the effective date.