About the Inquiry
The Scottish Government Budget 2019-20 proposes the following changes to the Land and Buildings Transaction Tax (LBTT):
• Reduce lower rate of non-residential LBTT from 3% to 1%;
• Increase upper rate of non-residential LBTT from 4.5% to 5%;
• Reduce starting threshold of upper rate non-residential LBTT from £350,000 to £250,000; and
• Increase Additional Dwelling Supplement (ADS) rate from 3% to 4% (on purchases of second residential dwellings over £40,000).
To implement these changes, the Land and Buildings Transaction Tax (Tax Rates and Tax Bands Etc.) (Scotland) Amendment Order 2018 was laid on 13 December 2018.
The accompanying Policy Note states that “these changes mean that non-residential LBTT rates and bands are the most competitive in the UK for all non-residential transactions. This supports the Scottish Government’s desire to ensure that Scotland remains a competitive and attractive location for business investment.”
In respect of the ADS, the Policy Note states that “this increase in the supplement forms an important element of the Scottish Government’s drive to protect opportunities for first-time buyers in Scotland, reinforcing the progressive approach in place for LBTT rates and bands.”
In its December 2018 Economic and Fiscal Forecasts, the Scottish Fiscal Commission suggests that the changes to non-residential LBTT will generate additional revenues of £13m in 2019-20 (P.127). Changes to the ADS are forecast to generate an additional £27m in revenues in 2019-20 (P.122).
The Order is subject to the provisional affirmative procedure. Section 68(4)b of the LBTT Act 2013 states that such an order—
“ceases to have effect at the expiry of the period of 28 days beginning with the date on which it was made unless, before the expiry of that period, the order has been approved by resolution of the Parliament.”
The Committee is therefore required to report on the Order by 23 January 2018.
The Committee held an evidence session with Kate Forbes, Minister for Public Finance and Digital Economy, on Wednesday 16 January. To assist with scrutinising the Order, the Committee was open to views on proposed changes to LBTT and the impacts they might have.
The deadline for submitting a response was Wednesday 9 January 2019.
The Committee received 8 submissions in response to this call for evidence:
The Committee published a report on the 21 January 2019.