Stamp duty system could change in Scotland

From Democracy Live: Finance Secretary John Swinney proposes a replacement to stamp duty

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The Scottish government wants to change stamp duty on house purchases from a percentage charge to a progressive tax.

Finance Secretary John Swinney told MSPs that by altering the system there would be a refocus on the "ability of the individual to pay".

The Scotland Act 2012 will give Holyrood control over stamp duty on land and property from April 2015.

Other powers coming from Westminster include control over income tax and borrowing powers.

Mr Swinney has also announced his intention to establish a new body, called Revenue Scotland, which would collect and administer taxes at a lower cost than that of Her Majesty's Revenue and Customs (HMRC).

He told MSPs: "The government's approach to taxation is founded on Scottish principles that have stood the test of time.

Stamp duty - current position

  • If you buy a property in the UK over a certain purchase price you have to pay Stamp Duty Land Tax (SDLT). This is charged on all purchases of houses, flats and other land and buildings.
  • If you buy either a freehold or a leasehold property and the purchase price is more than £125,000, you pay SDLT of between one and 15% of the whole purchase price.
  • If the purchase price is £125,000 or less you don't pay any SDLT.
  • There is a relief from SDLT for zero-carbon homes. All qualifying houses under £500,000 are exempt and houses bought for £500,000 or above will have their SDLT bill reduced by £15,000.

For more information on stamp duty go to the UK government's website

"Adam Smith's four maxims with regard to taxes; the burden proportionate to the ability to pay, certainty for the taxpayer, convenience and efficiency of collection were defined in 1776.

"They provide the basis for a system that will meet the needs of a modern, 21st Century Scotland, grounded on solid foundations. To those four principles this government will add our core purpose of delivering sustainable economic growth and meeting the distinctive needs of Scotland."

The finance minister will consult on his stamp duty proposal - which he wants to rename land and buildings transaction tax - and then report back to parliament.

In broad terms, stamp duty is currently charged as a percentage of the amount paid for a property or piece of land - unless there is a relief or exemption.

Mr Swinney explained to the chamber: "In today's consultation on the proposed Land and Building Transaction Tax we have signalled our preference for a progressive system of taxation where the amount of tax paid is more closely related to the value of the property and therefore to the ability of the individual to pay.

"At the same time our consultation also indicates a willingness to adjust the threshold at which taxation is levied in order to support those at the lower end of the market.

What is the government consulting on?

house sale sign
  • Mr Swinney is seeking views on removing stamp duty from all purchases below £180,000
  • He said the move would ensure that all those purchasing properties under £325,00 would see the tax they pay decrease
  • Mr Swinney believed the change would bring benefits to about 95% of the property market
  • He added that those purchasing properties at higher values "would of course pay more"
  • Reliefs and exemptions will be looked at as part of the consultation
  • Anti-avoidance measures will also be looked at

"To ensure that the views of the taxpayer and expert communities remain embedded in the development of our approach to taxation, we will also establish a Tax Consultation Forum to which representative bodies, networks and organisations with an interest in the tax system can contribute.

"This will complement our formal consultation structures."

Scottish Labour said Mr Swinney's statement was rushed, lacked detail and failed to answer basic questions.

Its finance spokesman Ken Macintosh said: "The SNP tell us very little about how much tax they want Scots to pay, but expound at length on why we need a separate tartan taxman. This is more to do with John Swinney's commitment to separation than any commitment to fairness or transparency.

"Every statement the SNP make on the economy sounds like they're making it up as they go along. Their clearest declaration of intent is to cut corporation tax, but say nothing on the new taxes they now have direct responsibility for."

The Scottish Conservatives said they were worried that in tough economic times, the Scottish government was planning to create "yet another quango" to collect taxes north of the border.

The party's finance spokesman Gavin Brown said: "Revenue Scotland will no doubt have considerable start-up costs, as it is starting from scratch with no systems or infrastructure.

"I would call on the Scottish government to get a detailed cost break-down from the HMRC and others to make sure they have robust figures.

"This is just more back-of-the-fag-packet policies from the SNP."

'Tax dodgers'

Leader of the Scottish Liberal Democrats Willie Rennie said he was disappointed that Mr Swinney failed to set out a grand new vision for the new tax powers included in the Scotland Act.

He added: "What got him excited was the prospect of setting up a new tax office quango with all the potential costs and extra administrative burden on business that come with it."

The Scottish Greens said they now wanted to see the Scottish government do all it could to "weed out tax dodgers".

Their leader Patrick Harvie said: "It's vital that Scotland doesn't recreate the tax-dodging culture which has thrived in the UK. The government's consultation does not commit to a general anti-avoidance rule but at least the cabinet secretary agreed to listen to the case for beefing up his approach."

A spokesman from the Scotland Office said it welcomed the fact the Scottish government was consulting on how to tax the sale of property and land in Scotland.

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