Increasing numbers of North East businesses are acquiring property in Scotland as part of their expansion into areas such as Aberdeen, Edinburgh and Glasgow. However, recent announced changes will impact upon property acquisitions completed after 1 April 2015. For some, the new Land and Buildings Transaction Tax may increase the tax payable on acquisition and for others the new regime may reduce taxes.
North East based purchasers of property in Scotland should consider whether they will be affected and may wish to seek to accelerate or delay purchases accordingly. Angel Haig of our MHA affiliate firm Henderson Loggie has summarised below the major changes.
The first of the devolved taxes, land and buildings transaction tax (LBTT) comes into force on April 1 2015, replacing stamp duty land tax (SDLT) in relation to transactions involving land in Scotland.
LBTT is similar to SDLT in many ways, however, where SDLT is a slab tax (i.e. the whole price is taxed at a fixed rate) LBTT will be a progressive tax (i.e. slices will be taxed at different rates depending on the bracket they fall into).
The announcement gives more certainty to the housing market which has suffered in recent months due to the referendum and the unknown rates of LBTT.
Those purchasing residential property for a price exceeding £324,285 will want to consider a purchase prior to April 1 2015 as that is the level at which LBTT exceeds SDLT.
Those purchasing residential property below that value may wish to defer purchasing, where possible, until after April 1 2015 as there is a saving to be made.
Therefore, it is likely that there will be more movement in the more expensive properties in the next few months.
At the upper end of the market, a house purchase at £1.5million will cost £137,300 in LBTT, an effective rate of 9%, instead of the 5% rate of SDLT.
If you are considering purchasing a commercial property then the point at which LBTT exceeds SDLT is a purchase price of £1.95million.
Although LBTT doesn’t come into effect until April 1 2015, transactions that are ongoing at present that are not completed until after this date will be caught by LBTT, rather than SDLT.
If you’d like further guidance in relation to these changes, please contact Alastair Wilson on 0191 285 0321 or email firstname.lastname@example.org