12 Feb 2018
Figures released by Revenue Scotland and analysed by the Scottish Property Federation have shown that revenues from the Land and Buildings Transaction Tax (LBTT) remained at near record levels in December 2017.
Nearly £62m was raised by the devolved tax in December, which is one of the highest monthly revenues generated by LBTT since its introduction in April 2015. The year-on-year increase is £13.4m and the expectation is that revenues will meet government forecasts.
A buoyant commercial market was the main driver behind the figures, with several high value transactions taking place during the month helping to almost match November’s record high. Commercial LBTT revenues have been significantly higher than 2016 levels for the past two months, reflecting a strong end to the year for commercial sales over £5m.
LBTT revenue from residential sales, however, has plateaued after several months of reduced activity at the £325k+ level of the market.
Current rates and thresholds mean that LBTT revenue is disproportionally dependent on higher value residential transactions, which peaked in August and have since fallen back.
Despite monthly residential LBTT revenues treading water at the £33m mark, the Scottish Government is still likely to see a record amount of LBTT from residential sales in 2017/18. This has been due, in part, to the £88m paid to date through the Additional Dwellings Supplement (second homes tax), which came into effect in April 2016.
David Melhuish, Director of the SPF, commented:
“It is clear from this year’s tax receipts that the government’s revenue goes up significantly when there are more higher value homes sold. However, our members tell us that this level of the market is being supressed by the current rates and thresholds, which see residential sales values above £325,000 taxed at a relatively steep 10%.
“If the threshold for the 10% rate of LBTT was raised to £500,000, we believe that there would be more activity in the Scottish residential market. Not only would this help to support the property industry in Scotland and allow families to move up the property ladder, but increased transactions could offset any reduced revenue from realigning the thresholds.”
“It is also valuable to note the importance of a strong commercial property market. This has significantly boosted revenues recently, following two months where figures considerably exceeded those of 2016/17. Maintaining a focus on this sector remains key.”
Notes to editors
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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
February 12, 2018