Chamber and committees

The amendments in group 7 relate to the administration of the levy and the information-sharing arrangements that will be needed to ensure that the levy can be operated effectively. The group contains three Government amendments that I invite the committee to support and one non-Government amendment that I ask the committee to resist.

Amendment 7, in my name, will make a practical and administrative improvement to the operation of the levy. It will require Revenue Scotland to cancel a person’s registration where that person has notified Revenue Scotland and Revenue Scotland is satisfied that the person has ceased their activity and will not carry out any activity that could give rise to a levy liability.

Under the bill as introduced, developers can choose to register voluntarily in advance of completing any new residential units. That is helpful for large or phased developments, but it would also create a scenario in which someone might remain registered despite no longer intending to build. Amendment 7 will provide a clear and proportionate mechanism for addressing that situation. The amendment has been requested by Revenue Scotland, and it reflects standard practice across other devolved taxes.

Amendment 58, which was lodged by Michelle Thomson, would require levy liabilities to be paid in instalments over a minimum of a five-year period for certain types of development, including build to rent and purpose-built student accommodation.

Although I fully recognise the cash-flow concerns that have been raised by parts of the development sector, I am unable to support amendment 58, because its effect would be to mandate a single-payment approach in primary legislation, regardless of the size of the levy liability, the type of developer, the behavioural or fiscal impacts, or the taxpayer’s ability to pay. Creating such an unconditional arrangement would significantly increase the risks of non-payment and defaulting, which would ultimately undermine the revenues that are available to the cladding remediation programme.

I will just pick up a couple of points in winding up.

With regard to Craig Hoy’s comments, the Government amendments will require the use of the affirmative procedure and the Parliament’s approval to ensure that the legislation is not ended at that point in time. The provisions in the two amendments are broadly similar. As Patrick Harvie has pointed out, any future Parliament could extend or, indeed, repeal the legislation if it so chose, but the point of the sunset clause is to give the comfort that the industry was seeking with regard to the Government’s intent.

I am glad that you ignored them, convener.

As is the case with how the UK Government has configured its measures, the target is to raise £30 million a year, spread over either more or fewer properties. If there are more exemptions, that has an impact on the rate charged on the other properties. We will debate that as we go through the exemptions that members have proposed, some of which would have a greater impact than others. We will consider those. Even for the most significant ones, the numbers would not in fact be so significant.

10:45

There are two points to answer there. I was going to make the point that, although we cannot support these specific amendments, I am very happy to discuss further with Michelle Thomson and Mark Griffin, and with any other interested members, any further measures that the Government could take to support first-time buyers.

As Michelle Thomson indicated, there may be other mechanisms through which that could be done with regard to the levy, but these amendments would not give effect to that. There is a commitment to discuss how that could be done, whether through land and buildings transaction tax buyer relief, which already plays an important role in supporting people to get on to the property ladder, or through other mechanisms that we could consider.

Another point to bear in mind is that 22 per cent of new-build sales are to first-time buyers. While the proposed measures would potentially have the effect of supporting first-time buyers, therefore, given that the levy is configured to raise £30 million a year, it would mean that the levy that is applied on properties that were not purchased by first-time buyers would be higher— in this case, significantly higher.

Amendments 20 and 41, in the name of Liz Smith, seek to introduce an exemption for heritage buildings. Although I am sympathetic to their aim, I have concerns that the amendments as drafted would risk incentivising people to seek listed status for tax reasons, which is not the aim of the listed buildings policy. I have already committed to a minimum 50 per cent brownfield relief, which I will touch on in speaking to amendments in a later group, but I am happy to discuss further with Liz Smith the issue of an exemption for conversions more broadly. I thank Scottish Land & Estates for its correspondence on the matter, and I have considered its views, because I recognise that we would want to encourage support for conversions.

Amendments 22 and 43 concern the creation of an exemption for key workers. As with the amendments on first-time buyers, the Government cannot accept these amendments, given the complexities that they would cause developers in trying to verify whether the occupiers were key workers and the potential adverse impact that that would have on the tax base.

I also draw members’ attention to the list of residential institutions in section 4(3)(b) of the bill, which are framed with a focus on the building itself and cover accommodation that is provided for those types of cases. If Meghan Gallacher wishes to highlight any types of institution that are not covered in that list, I would be happy to consider those.

Finally, I turn to Craig Hoy’s amendments 21 and 42, which would create an exemption for rural areas. I agree with the intention that remote rural development should be exempt from the levy, given the increasing costs and supply-line challenges that developers in more remote rural areas face. That is why we have already, in section 5 of the bill, exempted developments that are situated on islands. I have also committed to extending that exemption in regulations under section 6 of the bill to island-like rural areas of Scotland, in line with their hospitality relief for non-domestic rates.

Development in other rural areas will also benefit from the levy-free allowance, with a proportionally greater benefit to those building in class 4 and class 6 of the “Scottish Government Urban Rural Classification”, removing up to 81 per cent of units from the charge, depending on developer behaviour. Amendment 42, which defines “rural” specifically using the area classes, refers to that policy document, which has no legal status and is reviewed periodically. Regular legislative updates would therefore be required to keep pace, which would create uncertainty for taxpayers, whose sites may move between different definitions of rurality during the life cycle of a development.

On that basis, the Government cannot support amendments 21 and 42 as drafted, although I would be happy to speak with Craig Hoy to consider further measures that could be practically introduced to protect rural development.

For the reasons that I have set out, I ask the committee to support amendments 1, 2 and 4, and not to support the other amendments in the group.

On that point, do you recognise that, based on our estimation, the significant majority of houses in rural areas will already be exempt under the current proposals, based on the 19-house limit that was put in place?

Will the member give way?

I am happy to commit to meeting Homes for Scotland—I meet it regularly to discuss all kinds of issues. However, on the principle of the issue, we are clear about the implementation dates.

I am not clear about the point that Michael Marra is making on what might happen to the housing market in the next two years. If we are giving indicative rates 22 months out—which is what he is asking for—that is clearly being done in the context of not knowing what will happen to the housing market over that period.

I just want to clarify a point. I ask both members—

I have no further comments.

Amendment 3 agreed to.

Section 6, as amended, agreed to.

Section 7 agreed to.

Section 8—Person liable to pay levy

Amendment 4 moved—[Ivan McKee]—and agreed to.

Section 8, as amended, agreed to.

After section 8