Opinion Former Article

Chartered Institute of Taxation comment on Land and Buildings Transaction Tax (LBTT) announcement

Commenting on the Scottish Government’s proposal to increase the threshold of Land and Buildings Transaction Tax (LBTT) to £250,000, Joanne Walker, CIOT Scottish Technical Officer, said:

“There is a risk that by not increasing the threshold immediately, people will put off buying a house until the tax change takes effect so that they can benefit from today’s announcement. It will be important for the Scottish Government to set out quickly when these changes will take effect to prevent the housing market stalling in its recovery.

“Once implemented, the changes will mean that an additional 34 per cent of transactions will be taken out of LBTT, taking the total to 79 per cent. This will generate a maximum saving to taxpayers of £2,1001.

“That said, it remains the case that across the UK, there is still some uncertainty over who gains from a change of this kind. A 2011 UK government study found that previous cuts to help first-time buyers were mostly absorbed in a higher house price, benefiting sellers rather than purchasers2”.


Notes for editors

1.  A transaction with a value of £250,000 would have generated a tax liability of £2,100, with a rate of 2 per cent applied to the amount of the sale above the zero rate threshold of £145,000.

2.  See Government research casts doubt on effectiveness of stamp duty cut for a link to the report in question (CIOT press release – 22 November 2017)

3. The CIOT looked at the tax liabilities (excluding ADS) for residential property transactions in Scotland covering the period April 2019 to March 2020. The relevant figures are shown in the table below and can be found here https://www.revenue.scot/about-us/publications/statistics/datasets.

LBTT transactions (April 2019 – March 2020)

4. The Chartered Institute of Taxation

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 19,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

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