Contents
- Attendance
- European Union Competences (Funding)
- Subordinate Legislation
Subordinate Legislation
Land and Buildings Transaction Tax (Group Relief Modification) (Scotland) Order 2018 [Draft]
Our next item of business is consideration of subordinate legislation in relation to the land and buildings transaction tax. We are joined by the Cabinet Secretary for Finance and the Constitution and supporting officials Ewan Cameron-Nielson and John St Clair from the Scottish Government.
We must consider each statutory instrument separately, so we will have a short evidence session on each instrument before formal consideration of the relevant motion. First, we will take evidence on the draft Land and Buildings Transaction Tax (Group Relief Modification) (Scotland) Order 2018. I welcome the cabinet secretary and invite him to make a short opening statement, should he wish to do so.
Members of the committee will be aware that the laying of the draft order follows our engagement with stakeholders, who highlighted a small but significant divergence of approach between land and buildings transaction tax and stamp duty land tax in relation to the group relief provisions. That divergence related to scenarios in which share pledge-type arrangements were in place. I considered the matter and accepted the need for change. In March, I announced my intention to launch a consultation on draft legislation to make it clear that group relief should be available where such arrangements are in place.
I am grateful to everyone who took the time to respond to that consultation and to Revenue Scotland for their considered and valuable input to the Scottish Government’s thinking. All consultation respondents were in favour of the decision to amend the LBTT legislation, and that view seemed to be echoed across the chamber during the recent consideration of the Land and Buildings Transaction Tax (Relief from Additional Amount) (Scotland) Bill.
The focus today is on the draft order, but the committee will be aware of the widespread calls for any change to be made retrospectively. Indeed, two members of the committee explicitly raised that issue during the recent stage 3 consideration of the aforementioned LBTT bill. It is not normal practice to make changes retrospectively, so the matter requires careful thought. However, after detailed consideration, I can confirm that if the order is approved by the Scottish Parliament, the Scottish Government intends to introduce legislation to make the change in question retrospective in effect at an appropriate future opportunity. I note that that position is informed, in particular, by the Scottish Government’s original policy intent with regard to group relief.
I am happy to take questions.
I am glad that you clarified the issues around retrospectivity.
As members have no questions, we move to item 3, which is consideration of motion S5M-12474. I invite the cabinet secretary to move the motion.
Motion moved,
That the Finance and Constitution Committee recommends that the Land and Buildings Transaction Tax (Group Relief Modification) (Scotland) Order 2018 [draft] be approved.—[Derek Mackay]
Motion agreed to.
Land and Buildings Transaction Tax (First-Time Buyer Relief) (Scotland) Order 2018 [Draft]
Under item 4, we have a further piece of subordinate legislation on LBTT to consider. Do you wish to make an opening statement, cabinet secretary?
Yes please, convener. I will be very brief.
Members will be aware that, last December, as part of the draft Scottish budget, I announced my intention to introduce relief from LBTT that would be focused on supporting first-time buyers in Scotland. The proposed relief is intended to complement our progressive approach to the setting of LBTT rates and bands, which has prioritised support for first-time buyers. We have taken a range of other measures to support first-time buyers.
As a result of consultation, a number of changes have been made to our proposed approach. I believe that the approach that we have taken to setting the eligibility criteria for the relief is sensible and appropriate, and that it will minimise complexity as much as possible. As far as the impact is concerned, as members of the committee will be aware, raising the nil rate threshold for first-time buyers to £175,000 will mean that an estimated 80 per cent of first-time buyers will pay no tax if the relief is agreed to. In addition, those who purchase a home above the threshold will benefit from a £600 reduction in their tax, regardless of the purchase price of their home. The Scottish Fiscal Commission has independently estimated that the policy will benefit around 12,000 first-time buyers each year.
I am happy to answer any questions.
Murdo Fraser has a question.
How is the term “first-time buyer” defined in the order? How will that be policed?
The policing and monitoring of that will be for Revenue Scotland, as the appropriate tax collection agency. It has established procedures for that. I know that Revenue Scotland has communicated with the committee on its general approach and some specific matters.
The consultation was really important in obtaining a full understanding of the issues surrounding the eligibility criteria for first-time buyers. An example of one of the considerations is whether, in the case of joint prospective ownership, just one partner should be eligible or both partners should be eligible. We have set out a range of criteria. I could go through the detail, which I think is set out in the order. That is what we consulted on, and that is what is in the order. I can read out the criteria, if the member wishes me to.
I do not think that he does.
I am happy for you not to.
That is a relief for us all.
As there are no further questions, we move to item 5, which is consideration of motion S5M-12473. I invite the cabinet secretary to move the motion.
Motion moved,
That the Finance and Constitution Committee recommends that the Land and Buildings Transaction Tax (First-Time Buyer Relief) (Scotland) Order 2018 [draft] be approved.—[Derek Mackay]
Motion agreed to.
In the coming days, the committee will publish a short report setting out its position on both orders. I thank the cabinet secretary and his officials for their attendance.
Meeting closed at 11:25.Previous
European Union Competences (Funding)