26 Jun 2013
Policy area: Taxation
The Scottish Property Federation has welcomed proposals that will see the Scottish Government and industry experts examine support for development funding under the new Scottish Land and Buildings Transaction Tax (LBTT).
The SPF also welcomed the replacement of the discredited ‘slab’ tax structure that exists for SDLT with a progressive rate of tax structure that will remove market distortions from the residential property market in particular.
The LBTT will replace stamp duty land tax and is the first new tax introduced at Holyrood since the Act of Union. It will introduce a tax on residential and commercial property transactions, including commercial leases and some licenses, from April 2015. But following industry concerns Holyrood has established a working party to assess options for supporting relief for development funding based on forward funding type arrangements, while protecting the tax authority against tax avoidance.
Jestyn Davies, Chairman of the Scottish Property Federation, said: “On the whole we welcome LBTT as a better tax than SDLT. While we’d like to have seen further clarity and certainty from the Government on the likely rates and thresholds for the commercial property sector in particular, we do welcome the establishment of a working party to consider the issue of relief for forward funding type arrangements to support the hard-pressed property development industry.
We understand the Scottish Government’s determination to ensure LBTT is not subject to tax avoidance schemes but we are concerned that one unintended consequence of the removal of sub sale relief is that we will lose relief for genuine commercial investments that will benefit economic development. This could leave us with a significant competitive disadvantage for the Scottish development industry compared to the rest of the UK.“