Kate Forbes, MSP, Cabinet Minister for Finance disappointed property buyers with her announcement on LBTT in the Scottish Budget. The Finance Secretary raised the LBTT threshold to £250,000 in July last year as the property market came out of lockdown. This took a huge number of buyers out of paying tax. The Finance Secretary announced that the threshold, would be reduced to the pre-pandemic level of £145,000. For first-time buyers, the starting threshold is £175,000. This change has been scheduled to come into effect on 1 April 2021.
It remains to be seen what impact, if any, this will have on the property market.
It has been very busy indeed since the property market was unlocked in June last year. People took advantage of the increased threshold. They paid no Land & Buildings Transaction Tax on any purchase up to £250,000. Those who purchased for more than that made a saving of £2,100.
What does this change in the LBTT mean?
This change now means that those paying over £145,000 will have to pay LBTT. The Cabinet Secretary did make the point that first time buyers don’t start paying until they reach their threshold of £175,000 which means they save £600.
Interestingly, the LBTT paid in the last quarter of 2020 was more than the LBTT paid in 2019 despite the threshold being higher.
We might not yet have heard the last of this. The Chancellor of the Exchequer delivers the UK Budget on 3 March 2021. If he decides to extend Stamp Duty (the English equivalent of LBTT) then the Finance Secretary will have a very difficult decision to make. Should she follow suit or stick to her guns and bring the threshold back down.
There’s still time to buy and beat the deadline! Your purchase will need to settle before 1st April 2021. So, if you are thinking of buying and want to beat the deadline get your skates on!
