3 May 2018
Figures released by Revenue Scotland and analysed by the Scottish Property Federation (SPF) have shown that annual revenues from the devolved Land and Buildings Transaction Tax (LBTT) exceeded the Scottish Government’s 2017/18 forecast.
LBTT generated £568.9m between April 2017 and March 2018, 12% more than the government's expected revenue of £507m (as set out in the 2017/18 draft Scottish Budget).
The 2017/18 revenue is in stark contrast to the previous year’s (2016/17) revenue of £468.6m, which undershot Scottish Government estimates by some £69m.
LBTT revenue from residential sales were the biggest factor behind the increase in LBTT revenue. Tax take from home sales totalled £260.4m, some 23% more than the forecast of £211m. Revenues increased steadily to a peak in August 2017, when they levelled out at sums consistently higher than the previous year.
The Additional Dwellings Supplement (second home tax) also significantly exceeded government expectations with provisional revenues of £107.3m, nearly 50% above expectations.
However, revenue from commercial transactions ended 10% below Scottish Government estimates – despite sizable spikes in revenue in November and December last year. The annual figure reflects the fragility in the commercial market and wider economy and means that the Scottish Government fell £22.9m short of its forecast of £224m for commercial LBTT.
Significantly, the Scottish Government expects to see LBTT bring in £588m in 2018/19 - £19.1m (3.4%) more than was generated in 2017/18.
Reacting to the new LBTT data, David Melhuish, Director of the SPF, commented:
“After falling considerably short of forecasted LBTT revenues in 2016/17, the Scottish Government will no doubt be relieved that 2017/18 saw revenue exceed forecasts.
“While the residential market has seen a strong year, the commercial market remains subdued in Scotland, which led to lower than expected commercial LBTT revenue. It is important that the Scottish Government continues to make the Scottish economy as competitive as possible and give businesses the stability they need.
“Looking ahead, the Scottish Government is counting on LBTT to generate £588m in this current fiscal year (2018/19). Most of the increased revenue expected to come from the residential sector, with expectations that revenue from house sales will be £45m (17.1%) higher than in 2017/18. However, with reports of fewer houses being brought to market, there remains a question over the ability of the market to deliver the increased transactions needed to meet this forecast.”
About Scottish Property Federation
As a membership organisation the Scottish Property Federation (SPF) is the voice of Scotland’s real estate industry. Established in 2007, SPF represents 185 organisations operating in Scotland. We include among our members: property investors including major institutional funds, developers, landlords of commercial and residential property, and professional property consultants and advisers. The SPF works closely with those who advise and decide on public policy in Scotland to ensure that they are aware of the consequences of their decisions for the property industry and wider economy.
As part of the British Property Federation we also benefit from close links with the leading UK property companies and investors in the UK as well as the BPF's contacts with Westminster.
For more information, please visit http://www.scottishpropertyfederation.org.uk or follow us on Twitter @ScotPropFed.
For further information please contact Colin McFarlane or Elizabeth Lambley on 0131 554 1230.