Taking Forward a Scottish Land and Buildings Transaction Tax Consultation: An Analysis of Responses

An analysis of responses received to the consultation on Taking Forward a Scottish Land and Buildings Transaction Tax Consultation.



The Scottish Parliament will have new financial powers from April 2015 over taxes on land and property transactions and on disposal to landfill. This consultation is the first of three dealing with these devolved tax powers and is focused on introducing a land and property tax to replace the current UK Stamp Duty Land Tax (SDLT) system.

The consultation on a replacement for Stamp Duty Land Tax in Scotland has sought views from a wide spectrum of individuals, businesses and other organisations with an interest in land and property sales and leases.

The immediate aim of the consultation was to gather views on how best to design the replacement tax on land and property transactions in a way which minimises distortions, make it as easy as possible for tax to be paid and maximises receipts.

Key changes proposed were:

  • Changes to the way SDLT charges are calculated, with the proposed introduction of a progressive tax structure (so that the tax, like income tax, is only paid at the applicable rate(s) on the amount within each threshold).
  • Changes to the administration of SDLT and how it links to land registration, with proposed new online arrangements.

A number of other changes have also been proposed, for example the scope of reliefs and lease charges for residential property.

This report provides an analysis of consultation responses received.

Overview of the responses

A total of 56 written consultation responses were received. There were no identical responses although some respondents (both organisations and individuals) referred to and supported other responses. We have considered all 56 responses for analytical purposes.

Responses were submitted by 13 private individuals; 13 professional/representative or trade bodies; 11 legal and accountancy organisations and their representative bodies; 9 house-builders, developers, RSLs and their representative bodies; 6 voluntary, charitable or other private organisations; and 4 local authorities and their representatives.

In addition to written responses, feedback was gathered at four consultation events held by Scottish Government officials during July and August 2012 in Aberdeen, Edinburgh, Glasgow and Perth. The events were attended by a range of representatives with an interest in the new tax, and involved small group discussions focusing on the areas of the consultation paper of most interest to the participants. To a very large extent the views expressed at these events were reinforced in the written responses of participants and others - but some additional points made at these events are also included in the report. Indeed, a number of those who attended events also submitted a written response to the consultation.

Summary of responses

Structure and scope of the proposed tax

There was majority support for the move to a progressive tax for residential property, but mixed views on whether this should extend to commercial land and property. Respondents argued it is more important to remain aligned with the rest of the UK in relation to commercial land and property.

There was majority support for amending LBTT in future to align with government priorities, although some respondents (from across respondent groups) were less enthusiastic than others. Concerns expressed across respondent groups included the need to avoid complexity and uncertainty; the need to review whether in all cases policy priorities were best supported through the tax system rather than in other ways; and the need for Scotland to remain and be seen to remain competitive.

On the topic of exemptions and reliefs there was a large measure of support for maintaining the current reliefs and exemptions. There were many more suggestions of new reliefs or exemptions.

The majority supported exemptions for residential leases of 20 years or less.

The complexities of commercial leases (in comparison with residential leases) were widely acknowledged. Some practical measures were proposed for improving the LBTT arrangements for commercial leases in future, but there was recognition that time would be needed to assess and consult on these.

There was general support for aligning LBTT with Scots Law in relation to Partnerships and Trusts. However, this was seen as another area of complexity requiring further detailed work and consultation. As with commercial leases, there was recognition that bringing forward required changes may not be achievable in the initial legislation.

Administration and implementation issues

On the topic of anti-avoidance (or anti-abuse) measures the strength of overall view seemed to favour a General Anti-Avoidance Rule (GAAR) rather than a series of Targeted Anti-Avoidance Rules (TAAR) - but there was by no means consensus (including among those with significant experience or expertise in this area). For many, the priority was ensuring the rules were clear whatever approach was taken.

As far as administration of LBTT is concerned, there was majority support for a new online facility linking LBTT returns with LBTT payment and registration of title. But there was also a clear view that online returns should not be compulsory (not least on equality grounds given limitations to broadband access). And there were some strongly held views against requiring payment of LBTT before title can be registered.

Several practical implementation issues were raised. These included the need for clear guidance and ongoing advice; resourcing of Revenue Scotland and/or Registers of Scotland to establish a robust system; and transitional arrangements from the current system to LBTT.

General points of principle

A number of individual respondents who disagreed in principle with the proposed LBTT set out their counter-arguments in favour of an annual land tax as opposed to a property transaction tax. They believed that a different approach to taxation was required.

And finally, there was concern that details of proposed tax rates and thresholds were not yet known; and also that the underlying revenue assumptions needed further examination given the recent market conditions on which these had been based.


Email: Alix Rosenberg

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