Building Safety Levy Expert Advisory Group minutes: July 2025

Attendees and apologies

An exact attendance list is not available for this meeting. An updated list of Group members can be found on the Building Safety Levy Expert Advisory Group webpage.

Items and actions

Welcome and introduction of new members 

New chair introduced. New members welcomed and outgoing members noted. Apologies noted. 

Agreement of previous meeting minutes 

The minutes of the previous meeting were approved by the Group. 

Agreement of updated Terms of Reference (ToR) 

Some changes to the ToR for the Group noted, including:

• new chair and membership changes 

• minor changes to reflect policy development progress including the proposed commencement date for the Scottish Building Safety Levy (SBSL) and the completion of the devolution process in December 2024 

• a change to the annex to provide links to SBSL webpages 

Clarifying question asked on the language of ‘introduction’ versus ‘commencement’ date for the SBSL, to confirm whether there has been a change of meaning and to note that ‘commencement date’ is clearer language. Confirmed that no change in meaning is intended and that the ToR can be edited to refer to ‘commencement’ for clarity.  

The Group agreed to the updated ToR.   

Overview of Building Safety Levy (Scotland) Bill 

Overview of key events since the previous meeting provided, including: 

• the introduction of the Building Safety Levy (Scotland) Bill  

• publication of cladding cost estimates  

• publication of Housing Investment Taskforce report, on 12 June  

• appointment of Cabinet Secretary for Housing  

• publication of Homes for Scotland (HfS) report on small and medium enterprise (SME) homebuilders  

• designation of Finance and Public Administration Committee as lead committee for scrutiny of the Bill and the opening of their call for evidence, which was signposted to members via correspondence  

• publication of regulations for the UK Government’s (UKG) England-only Levy 

Slides giving an overview of the Bill and its provisions as introduced spoken through, including: 

• key aspects of policy design 

• definition of taxpayer  

• calculation of tax with rates to be set in secondary legislation, with consideration for indicative rates to be announced in advance 

• point of payment  

• use of revenue  

• key differences between the SBSL and the England-only Levy 

• ongoing work throughout Stage 1 including intentions for further Expert Advisory Group (EAG) meetings and stakeholder engagement on key areas of policy development 

Questions and comments on the presentation from the Group invited: 

Feedback noted from HfS members on the need for alignment between the SBSL and the England-only Levy to accommodate developers who operate north and south of the border, reflecting that there are differences between e.g. the legal systems but that there is a desire to maintain alignment and parity as far as possible.  

Point echoed on alignment, reflecting that it can be helpful to ensure those who work across these contexts come together to collaborate at key points of consultation.  

Question on the intention behind provisions for bonding/security arrangements and the requirement for non-resident taxpayers to appoint tax representatives, noting that these are not typically included in existing taxes. Confirmed that although the operational policy/guidance had not been drafted yet the current view was that bonding/security arrangements would only need to be used  in exceptional cases, for example if there were concerns about a taxpayer’s payment record, and reflected later in the meeting using the chat function that these additional safeguards are required to protect revenues given the more favourable payment regime proposed in comparison to the England-only Levy. Also confirmed that the requirement to appoint a tax representative is a safety measure to account for a small number of non-resident taxpayers and to ensure that Revenue Scotland are able to contact someone and avoid potential issues in these cases. Noted that similar clauses exist for Scottish Aggregates Tax.  

Further follow-up questions asked using the chat function, on the VAT position on reduced rate conversions, and on the circumstances under which Revenue Scotland would publish the register of taxpayers. It was agreed that Revenue Scotland would respond to these questions via correspondence.  

Point raised that Scottish Property Federation members, many of whom are from the Build to Rent (BTR) sector, are keen to understand indicative costs of the SBSL given the importance of being able to factor these costs into appraisals. Question asked if there is an expected timeline for knowledge of these costs. Noted that UKG published indicative rates for the England-only Levy approximately 18 months in advance of their proposed commencement date and that, subject to Ministerial agreement, Scottish Government (SG) would be looking to follow a similar timeframe. 

Point echoed that it would be helpful to hear about indicative rates to ensure capability for forward planning.  

Question asked on how the outputs from previous and future EAG meetings will be used as the Bill progresses, for example by Ministers in the parliamentary chamber and in debates, noting that references to EAG meetings and contributions have been made in Bill documents and associated publications. Points have been raised by EAG members – such as the proposal for a ‘sunrise clause’ for the SBSL – that have not been responded to in the Bill or accompanying documents, and that accompanying documents state that no alternative solutions to the SBSL have been proposed when EAG members were never specifically asked to provide these alternatives. Response that that where references have been made to outputs or views from EAG meetings, this has been drawing from the minutes which are taken and published from each meeting, and that this will continue going forward. Point clarified that there are no plans to alter the Group’s role to a decision-making body, nor are SG seeking to ensure the Group form a consensus on any topics raised – rather, it has been helpful to hear a range of views from members and it is in this capacity that the Group will continue to meet. Noted that SG officials use the engagement with the Group alongside wider stakeholder engagement and evidence gathering to feed into advice to Ministers, and that the statement on alternative solutions was referring to this overall process of engagement. Point made that perhaps the role of the Group and the use of outputs from meetings could be made clearer, potentially through additions to the ToR if needed.  

Update on Scottish Government Cladding Remediation Programme 

Update on SG’s Cladding Remediation Programme provided, including: 

• signposting the publication of outputs from Cladding Directorate in June 2025 and welcoming questions from the Group on these, either via correspondence, in bilateral meetings, or at the next EAG meeting 

• the intention to publish the next instalment of the Plan of Action next week following a small delay, and that this will be building on what was previously published in March and setting out next steps for the Programme including the positive response to the open call and the next phase of identifying and assessing buildings for unsafe cladding  

• an overview of ongoing work with the social housing sector and Registered Social Landlords to gain a better understanding of the prevalence of unsafe cladding on these buildings and next steps for remediation  

SG officials will ensure the link to the upcoming Plan of Action publication is circulated to members.  

Homes for Scotland presentation – SME homebuilders in 2025 

Slides on the new report from HfS on SME homebuilders in 2025 spoken to, noting that: 

• SMEs are responsible for most rural/remote development as well as developing brownfield sites within urban areas  

• over the past 20 years, the number of SMEs is down two-thirds, and that HfS want to see SMEs recover and grow 

• the survey from HfS found that 88% of SMEs say the SBSL is detrimental to viability, 58% of SMEs estimate that new regulation since 2021 (which would include the SBSL) adds more than £20,000 to cost of building a new home, 88% of SMEs say their experience of building homes has worsened since 2020, and that the SBSL is the aspect of regulation that SMEs have the strongest views on with significant numbers stating that it will be “very detrimental” or “detrimental” to viability 

• the report provides recommendations from HfS to protect SMEs and to ensure regulation is proportionate, noting that the proposal for the levy-free allowance is a potential mechanism for this 

Further data and detail is available on the HfS website and within the full report and invited questions from the Group. 

Question asked requesting more detail on the decline of numbers of SMEs, asking whether this is sometimes the result of mergers and acquisitions. Response that the previous report from HfS provides more data on insolvency in the sector, and that some of the decline in numbers will be attributable to joint ventures as well as natural peaks and falls of the housing market and differences in business models. HfS are increasingly hearing from SMEs that they are simply moving out of homebuilding as it is no longer viable, with some moving into the commercial property sector.  

Question asked for further detail on the survey questions around the impact of regulation, specifically what cost values of the SBSL were put to respondents. Reply that respondents were asked to estimate the cost themselves, noting previous estimates from HfS that £3000 per unit would be the minimum cost. Points previously made on the importance of clarity and of understanding the anticipated costs to understand the impact of the SBSL reiterated. The cumulative impact of regulation raised, including New Build Heat Standard, electric vehicle chargers – noting that there are already existing costs within the system with more to be added. Noted that it may be especially difficult for homebuilders to understand the SBSL as having a positive long-term impact for them and their businesses, unlike with other aspects of regulation.  

Point echoed, on SMEs exiting the sector because viability is simply too low, raising that homebuilders are not able to set their own prices because this is controlled by market forces, meaning that margins are reducing. Noted that this is particularly impactful for SMEs which are unable to increase their housebuilding volume to accommodate for these reduced margins like larger businesses are able to. The view that £3000 per unit as part of an overall cumulative impact of regulation is significant for the SME sector, and that the SBSL will exacerbate existing problems, particularly pressures on housebuilding in rural areas given the strong role of SMEs in delivering homes in these regions.  

Discussion of policy paper – protecting small businesses 

Slides providing an overview of proposals to protect SME homebuilders spoken to, including: 

• a summary of the paper circulated to members noting the intention to mitigate the risk of disproportionate impacts on smaller developers, and the potential options to accomplish this, namely: 

• a small sites exemption for sites under 10 units (UKG approach)  

• an annual, per-developer allowance of levy-free units (SG’s preferred approach) 

• questions for the Group to consider on the merits of the levy-free allowance, any concerns with the approach, and views on the detail 

• preliminary data analysis based on new-build sales data from Registers of Scotland, providing a breakdown of developers by size, of new-build sales by developer size, and indicative analysis of the impact of setting the levy-free allowance at particular thresholds  

Views invited from the Group on the presentation and the proposal for the levy-free allowance. 

Point made that UKG have announced proposed exemptions from the England-only levy for sites of 50 units or fewer. Noted that SG officials are currently seeking a meeting with UKG officials to discuss their approach but clarified that their published regulations detail a proposed exemption for sites of fewer than 10 units.  

View stated that the levy-free allowance is a positive idea which would provide certainty and predictability. However, the importance of setting the threshold in the correct place was noted, and that a 10-unit allowance would not seem sufficient to protect SMEs.  

The importance of setting the threshold in the correct place echoed. Also raised that the presentations given in the meeting do not adequately reflect the number of developers building in rural areas on medium-sized sites that the smallest and largest developers do not tackle, and that the threshold must be set higher than 10 to accommodate SMEs who build these sites. Question asked on how long development would typically take on rural sites of 20-30 units. Reply stated that PLCs tend to operate with four sales per month from a site (48 per annum), and that SMEs will typically take on sites where sales will be lower than these numbers. Also noted that SMEs will likely build across multiple sites simultaneously and that this is important to cover overheads. Point emphasised that these medium-sized sites are difficult to manage which is why so few homebuilders will take these on, but that they are crucial for providing housing in certain areas.  

Additionally, the view was stated that the calculation method being based on floorspace of a property is not in alignment with the aim to mitigate impacts on SMEs, and that the calculation should instead be based on market value of a property to ensure homebuilders are not discouraged from building in areas with lower market values. Noted that the levy rates will vary in accordance with local authority areas to try to address differences in house prices, but that SG are also cognizant of differences within local authority areas and will be exploring potential options to try to mitigate this, and that there is a meeting planned in October for EAG to consider rates and areas. Reiterated the view that a floorspace calculation approach is in contradiction to SG’s aims for the SBSL and will discourage building in areas with low market values given similarities in build costs for most areas except for the most rural.  

Similarities noted, of the levy-free allowance proposal to those of other taxes and raised the point of avoiding a ‘cliff edge’ to ensure builders are not disincentivised to build more and that smallest developers are not put at a competitive disadvantage. Also noted was the reference to ‘connected persons’ in the circulated paper and the potential for tax avoidance, given potential complexities of splitting the levy-free allowance across group and corporate structures. Noted that if homebuilders were building fewer than 10 units per annum (if this is where the levy-free allowance was set), they would be exempt and not asked to do a tax return.  

Point raised that the SBSL seems to be being designed for traditional housebuilding, rather than the longer-term model of BTR developments, noting concerns around the impact on these developments given that the tax will need to be paid on a high volume of units at the same time. Point raised on communal areas (e.g. gyms) that are common in BTR developments, and how these will be accounted for in the calculation of the SBSL. Previous points echoed, on the cumulative impact of legislation and the particular impacts for BTR development (e.g. rent controls), noting a concern that the SBSL presents another barrier to BTR development in Scotland.  

The previous point on intra-region fluctuations in market values echoed, noting that there are significant variations in valuations within local authority areas. Previous point echoed, on the need to avoid unintended consequences and ensure there is not a reduction in housing delivery in rural areas.  

Table from Financial Memorandum for the Bill added into the chat box, showing the cumulative impact of proposed exemptions in the Bill on the tax base. Noted that exemptions reduce the size of the resulting tax base and therefore the rates that will be required to be set to meet the revenue target. View stated that the revenue target of £30 million per annum should be lowered given the differences between the housing markets and proportions of affordable housing in Scotland compared to England.  

Number of further points raised, including: 

• reiterating a previous ask from HfS for a sunrise clause for the SBSL 

• querying how the levy-free allowance will work in cases of joint ventures 

• raising recent discussions on the potential for aggregation of sites, particularly in rural areas, to increase housebuilding volume, and the potential for learning to come from this on how public/private partnerships may help to bring about increased development 

• querying the figure from the presentation that 80% of developers would be removed from charge, and whether these developers have been checked against Companies House to ensure accuracy 

• Response that this is a helpful intervention and SG officials will ensure this is checked as part of the quality assurance process on this analysis, and will seek to work with HfS to further understand and refine the figures  

Previous points echoed, on the impact of the SBSL on rural areas, noting the prevalence of community-led housing and the existing risks to delivery of these sites. Also queried was whether the levy-free allowance will create uncertainty for house purchasers when developers reach the end of their levy-free allowance. Previous point repeated, that it is unlikely that the developer will be able to increase house prices in these cases because prices are determined by the market. 

Earlier point reiterated that with the revenue target for the SBSL remaining consistent, the more SMEs are removed from charge the larger the resulting tax burden for the larger developers will be, noting that this does seem to be broadly the correct approach given the vulnerability of SMEs. It was highlighted that if SG’s intention is to provide indicative rates 18 months in advance, this only leaves a short timeframe for policy details to be finalised, including on SMEs, brownfield developments, and regional variations in rates. Emphasised was the importance of certainty and predictability, noting that appraisals are already being made on developments which will be subject to the SBSL, and that a faster dissemination of the detail of the SBSL will be beneficial for certainty and forward planning. Confirmed that SG’s intention and approach is to take the time to ensure that decisions are made using the best possible evidence and understanding of their impacts, rather than made prematurely with the risk of amendment at a later date which would generate increased uncertainty. Approach supported by member, and noted that most of the variations between the SBSL and the England-only Levy have been positive changes. 

The need for certainty was echoed, and noted that this view has been voiced consistently by HfS members. Also raised was that if the levy-free allowance threshold is set too low, this may have the unintended consequence of discouraging growth. Reiterated was the previous point about ensuring homebuilders developing medium-sized sites are protected.  

Previous point about joint ventures was revisited and ensuring partnerships are appropriately accounted for with the levy-free allowance. Noted that this will be a key point for SG and Revenue Scotland to consider to ensure these cases are handled fairly.  

Members were thanked for their contributions and invited any further questions or comments via correspondence. 

Programme of future work  

The intended programme of future meetings for the Group from now until the conclusion of Stage 1 of the Bill spoken through: 

• September meeting to cover transitional arrangements, affordable housing definitions, and the UKG regulations (with the potential for a UKG official to attend) 

• October meeting to cover the calculation methodology including the specifications for floorspace, regional variations in rates, and treatment of rural areas 

• November meeting (to be led by Revenue Scotland) to cover administrative requirements for filing tax returns, accounting periods, and dormancy 

Views from the Group invited, on this programme plan and on any further topic suggestions to be considered at these meetings.  

Point reiterated view that the SBSL should be calculated based on market value rather than floorspace, and that this should be considered at a forthcoming meeting.  Challenges noted, with the market value approach (including for example the differences in valuations available for BTR developments) but stated that a short discussion could be arranged on this issue. Members noted the impact of the SBSL on lower value homes and queried whether there would be a way to adapt and add to the floorspace calculation to arrive at a fairer assessment/approximation of value. Point raised that it would be helpful to understand the strength and breadth of this view on the calculation approach. Response that several housebuilders disagree with the market value calculation approach but in his view this is not a justifiable position, and the market value approach is the way to ensure proportionality. Also noted that a type of valuation will be carried out for BTR developments even if this is not an approximation of sale price. Brief discussion that the ultimate aim may be to capture profitability, or the closest approximation. Confirmed that a separate discussion could be held on the market value approach, and invited members to confirm who would be interested in attending – number of members noted their interest.  

Any other business

No other business was raised by the Group. 

Noted that the next meeting will be scheduled for September and that the secretariat will be in touch with members to arrange a date/time.  

Actions 

• SG officials to edit ToR to reflect language of ‘commencement date’ for the SBSL to ensure clarity 

• Revenue Scotland officials to follow upJ via correspondence to respond to questions on VAT and the publication of register 

• SG officials to ensure it is made clear how the outputs from the EAG meetings will be used, potentially editing the ToR to reflect this  

• SG officials to circulate the link to the next instalment of the Cladding Plan of Action to Group members 

• SG officials to follow up with HfS to work through and refine the indicative analysis and figures on developer size and impact of the levy-free allowance