Tax cut for Scots home buyers starts next week

Kate Forbes said she was delighted to remove uncertainty from the market

A temporary cut to the transaction tax on house sales will be introduced next week, the Scottish government has said.

Finance Secretary Kate Forbes announced the cut to the land and buildings transaction tax (LBTT) on Thursday.

The move followed UK Chancellor Rishi Sunak's announcement of a stamp duty holiday on house sale transactions in England and Northern Ireland.

Ms Forbes had said the Scottish change could not come into force immediately for "administrative reasons".

However, she has now announced the changes will begin on Wednesday 15 July and remain in place until 31 March 2021.

The changes will mean the starting point for paying the LBTT on house purchases will rise from £145,000 to £250,000.

Ms Forbes said this meant eight out of 10 house sales in Scotland would be exempt from the tax.

Home-movers buying a house costing more than £250,000 will save £2,100.

The UK chancellor announced a stamp duty holiday on transactions in England and Northern Ireland of up to £500,000 as part of his summer statement of measures to respond to the coronavirus crisis on Wednesday.

Mr Sunak announced a range of reforms - such as a VAT cut for the hospitality industry and funding to encourage firms to keep furloughed staff on - which applied UK-wide.

However, housing and residential taxes are devolved to Holyrood, meaning there were calls for Ms Forbes to mirror the stamp duty cut in its Scottish equivalent, LBTT.

Opponents said that not originally stating a date for the tax cut risked people holding off completing a house purchase until the change was implement.

Scottish Conservative leader Jackson Carlaw said any delay risked damage to the housing market.

He said: "Not only will it stall the housing market and put the lives of buyers and sellers on hold indefinitely but it will also deal a huge blow to the many trades who depend on people moving house, and have already endured nearly four months of inactivity."

Ms Forbes said she was delighted to remove uncertainty from the market.

She said: "The UK government had weeks to prepare for its decision this week to raise the threshold at which Stamp Duty Land Tax is paid on house purchases in England and Wales, yet we were given no advance notice.

"We responded yesterday to clarify our policy intentions and by introducing the change so rapidly, we are providing certainty to people in the process of purchasing a home.

"Overall, increasing the LBTT threshold will help increase housing market activity, boost the construction sector and stimulate our economy."

The Scottish government said the change will be made with effect from Wednesday but will require approval by the Scottish Parliament within 28 days to remain in force.