Holyrood should start work on new Scottish property taxes - Moore
The UK Government will scrap Stamp Duty in Scotland in 2015 and allow Holyrood to design a completely new set of property taxes and collection process, Scottish Secretary Michael Moore said today.听
The UK Government will scrap Stamp Duty in Scotland in 2015 and allow Holyrood to design a completely new set of property taxes and collection process, Scottish Secretary Michael Moore said today.听
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Mr Moore said with the听Scottish Government indicating they will use the new Scotland Bill powers to depart significantly听from the current UK Stamp Duty system,听he urged them to set out their plans听long before听the听switch off in April 2015 in order to ensure there were no late surprises for Scottish home buyers and builders.听
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The Scottish Secretary said starting from scratch with a new set of Scottish property taxes was听one of听the opportunities afforded by enhanced devolution听but it also brought a responsibility to ensure the new system was fair as well as providing听the revenue stream the devolved Government required.听听听
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The Scotland Bill, currently going through the UK Parliament, transfers control over Stamp Duty Land Tax to Holyrood. 听Revenue raised from this tax will remain in Scotland for use by the Scottish Government. The Scottish Government will be able to design a brand new land tax scheme including rates and thresholds, to fit with its objectives for the Scottish property market.
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The Scottish Secretary today visited a housing development in Edinburgh where 111 new homes are being constructed by Hart Builders for the Port of Leith Housing Association. He discussed ways in which the new powers could be used to help home buyers and the construction sector in Scotland.
Michael Moore said:
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鈥淭he Scotland Bill will give the Scottish Parliament the responsibility for land tax in Scotland. The Scottish Government have idicated they will depart significantly from the UK Stamp Duty system. That is entirely up to them and it is one of听the opportunities afforded by enhanced devolution.
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鈥淭hey will want to consider, as the UK Government does at present, how best to shape the tax in order to help the likes of first time buyers, house听builders, the environment and the overall economy. With a radical re-shaping expected听I would urge the Scotish Government to start setting out their plans long before we switch off Stamp Duty in 2015 so that there are no late surprises for anyone.
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鈥淭his shouldn鈥檛 be the silent hand over of tax powers at midnight in April 2015. This is a significant new power that it should be debated now so that the Scottish people and the housing sector can join in the make clear their views on how the system can change to meet their needs.
鈥淧eople don鈥檛 benefit from devolving powers in principle: they benefit from using them in practice. So let鈥檚 start the debate on how this new power can best help people in Scotland.
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鈥淣ew powers bring new responsibilities and Ministers at Holyrood will need to ensure the new system works effectively and that it is fair.鈥�
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Stamp duty land tax (SDLT) is a charge on acquisitions of an interest in UK land, paid at a percentage of the consideration given for the acquisition.听 The Scottish Government will have complete control over the design and administration of the devolved taxes on land transactions in Scotland.听听 Once SDLT has been 鈥渟witched off鈥� in Scotland, the Scottish Government may begin to charge the devolved taxes.听
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The Scottish Government may choose to levy taxes that are similar to SDLT but may equally choose to design each tax in a way that it feels better meets Scotland鈥檚 needs. The Scottish Government will not be able to levy their devolved taxes until SDLT has been disapplied.听The Command Paper published alongside the Bill proposed that 鈥渟witch off鈥� should be in April 2015
Switching off SDLT听 in Scotland will be achieved by Treasury Order.听
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The Scottish Government has full control over the design and collection of the devolved taxes and will therefore need to decide who will collect them in the future.听听Under the powers contained in the Bill, the Scottish Government will be free to enter into an arrangement with a third party to collect the devolved land transaction tax and landfill tax, or it may approach a UK Government department such as HMRC to undertake the work.
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HMRC estimates that, in 2009-10, 84,000 land transactions at over 拢40,000 (the notification threshold for SDLT) took place in Scotland.听 This amounted to 8.5% of total UK transactions. SDLT receipts from Scottish transactions are estimated at 拢250 million in 2009-10 (5.1% of the UK total).
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See the table below for numbers of Scottish transactions and Scottish SDLT revenue in earlier years:
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Year
Number of Scottish land transactions at over 拢40,000听听听
of total UK land transactions at over 拢40,000
Estimated Scottish SDLT Receipts 听听听听听听
of total UK SDLT Receipts听听听听
2005-06
143,000
9%
拢295尘
4.0%
2006-07
159,000
8.7%
拢430尘
4.5%
2007-08
155,000
9.5%
拢565尘
5.7%
2008-09
97,000
10.7%
拢320尘
6.7%
2009-10
84,000
8.5%
拢250尘
5.1%
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