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Scottish Budget...

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New transaction taxes for 2015 houses in Scotland - the best sense I can make of the speech on BBC News 24.

  • No tax on first £135K
  • up to £325k - some tax or other...
  • 12% tax above £1m

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http://www.bbc.co.uk/news/uk-scotland-scotland-politics-29536022

Homebuyers in Scotland will pay no tax on properties costing less than £135,000, Finance Secretary John Swinney has announced.

At the same time, a 12% rate for houses costing more than a million will come into force next April, when stamp duty is replaced north of the border.

Mr Swinney's comments came as he outlined his budget plan for the year ahead to Parliament.

He said the move would help first-time buyers.

Under the government's new Land and Building Transactions Tax, a marginal tax of 2% would apply to the proportion of a transaction between £135,000 and £250,000, while a 10% rate will apply to those between £250,000 and £1m.

Mr Swinney told MSPs: "As a result of the rates I have announced today, nobody will pay tax on the first £135,000 of their house purchase. 5,000 more transactions will be taken out of tax, supporting first-time buyers and those buying properties in the affordable market."

The finance secretary also said tax would be reduced for a further 44,000 house sales up to the value of £325,000.

And he added that the 12% top rate would ensure the most well-off made a contribution to the public purse.

The new charges will mark the first time Scottish Parliament has levied taxation since the Union in 1707, made possible after new powers were devolved to Holyrood following proposals put forward by the Calman Commission on strengthening devolution.

"In exercising its first judgements on national taxes, this government has put fairness, equity and the ability to pay at the heart of what it has done," Mr Swinney argued.

"That is the benefit of putting decisions about Scotland's future in Scotland's hands."

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Under the government's new Land and Building Transactions Tax, a marginal tax of 2% would apply to the proportion of a transaction between £135,000 and £250,000, while a 10% rate will apply to those between £250,000 and £1m.

Coo - I can see why the TV news decided to omit the details that were vague in my above post.

A 10% rate on £250k -> £1m strikes me as being very relevant. I remember the speech mentioning the relevance of £320k - however - and that is not mentioned in your more detailed post.

Might it be the case that it is really 2% from £135k to £320k - rather than £135k to £250k? If so, it would seem to be a lot less aggressive than the print-version.

I imagine that this will make the Scottish middle class a lot less mobile... perhaps less inclined to sell up and move to England?

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It's very disappointing.

Based on the rates above I think it means a tax cut for any house purchase under £324,285?

Above that number it quickly becomes a lot worse than stamp duty. But a third of a million is high enough already from my point of view.

Bad news for anyone looking to buy a normal house or flat in Scotland.

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Aren't they going after the Scots for unpaid poll tax now going back to Thatcher's days?

No, poll tax debts are unenforcible anyway because they are too old. And to make sure, the Scottish government passed a bill banning councils from pursuing them.

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[quote name="irrationalactor" post="1102600097" timestamp="1412874534"

Above that number it quickly becomes a lot worse than stamp duty. But a third of a million is high enough already from my point of view.

.

Fantastic.Under 1/3 of million you can buy a good propertyin Scotland.

This makes sense.

Would prefer scrapping stamp duty and issuing LVT but at least they got the balance right now.

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10% transaction tax is simply insane, and I dont understand why anyone would think its a good idea since the effect will be to a) increase house prices, B) make it much harder for first time buyers to get on the market, and c) further increase the tax burden on the middle class, for whom the UK isnt a particularly pleasant place these days as it is.

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I'm guessing they've attempted to construct a tax which will provide the same revenue as Stamp Duty while getting rid of the hard thresholds (where you pay the higher rate on the whole amount) in favour of more normal tax bands (where the higher rate only applies to the portion above the threshold).

Except as it's a tax cut for all purchases under ~325k (which must be the vast majority of properties), who do you think will get the benefit of the cash that used to go to the government? The buyer? Or the seller?

I think we will see an extra couple of percent on Scottish house prices as a result of this.

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Just an observation, but I would say this will not catch the rich, established families, our Lordly masters, whose property passes seemlessly from generation to generation using trusts.

Secondly I would also guess that the frequency of moving home is far lower in more expensive properties than it is in smaller, cheaper properties where people are moving around the ladder and to find work.

Very true. Some peripheral family in Scotland haven't moved for 300 years.

The poor and the rich will be largely exempt from this tax, as the poor will either not be buying or will largely fall below the threshold. The rich live off investments and land income and don't move. This leaves us with the working middle class, who have to move to where the jobs are.

I have no problem at all with property taxes, and a land value tax seems a very sensibkle and fair idea. Stamp duty (in whatever guise) is simply a tax on mobility and aspiration.

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Marginal tax bands makes sense. The trouble with RICs in England is they argued for marginal rates and keeping the existing tax bands.....greedy clueless *****, cake and eating it.

Edited by crashmonitor

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10% transaction tax is simply insane, and I dont understand why anyone would think its a good idea since the effect will be to a) increase house prices, B) make it much harder for first time buyers to get on the market, and c) further increase the tax burden on the middle class, for whom the UK isnt a particularly pleasant place these days as it is.

Why? All else being equal if stamp duty or a transaction tax rises as % it means a seller has to drop the price, because a buyer still has the same budget but with more being funnelled off to the government.

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Granted transaction taxes are worse than annual ones but it's progressive and eliminates the threshold jumps. On balance, a big improvement over sdlt.

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Why? All else being equal if stamp duty or a transaction tax rises as % it means a seller has to drop the price, because a buyer still has the same budget but with more being funnelled off to the government.

Actually they may have a very significantly reduced budget, as the deposit they have available is reduced by the tax, possibly impacting the maximum leverage they can apply by a large factor.

If they have scraped together the 30k 10% deposit, then lose 10k in tax, they no longer have budget for 300k, only 200.

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Actually they may have a very significantly reduced budget, as the deposit they have available is reduced by the tax, possibly impacting the maximum leverage they can apply by a large factor.

If they have scraped together the 30k 10% deposit, then lose 10k in tax, they no longer have budget for 300k, only 200.

Agreed, was just a simplified response to the idea that it would increase prices (all else being equal). People don't seem to get the idea that stamp duty is really paid by sellers not buyers, something easily conceptualised by imagining the effect of either a 0% or 100% transaction tax on prices. I don't necessarily like these sort of taxes, nor how easy a target they are for the state, but a progressive transaction tax seems a lot better than income and many other taxes.

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