Stamp Duty cut - Scots follow but Wales is silent

Following the temporary increase in the Stamp Duty threshold in England, the Scottish government has announced that it will also be temporarily extending the nil rate band of LBTT (the Scottish equivalent of Stamp Duty Land Tax).

The  increase will be to £250,000 and will apply until 31 March 2021, but, due to the way the Scottish tax system works, any change can only be made by an Act of the Scottish Parliament, so the start date is 15 July 2020. 

The Chancellor confirmed in his recent Summer Economic Update that the Stamp Duty threshold in England would increase from £125,000 to £500,000 for the period 8 July 2020 to 31 March 2021.

The Scottish extension is to a lower amount than that for the UK, but Scottish house prices are lower and an average priced Scottish house will not attract any LBTT.

An increase to £500,000, as per the English extension, would have virtually wiped out residential Stamp Duty north of the border.

The English extension was well over the national average house price due to the need to make an impact in London. 

It is not clear whether the Scottish surcharge for second homes will reduce. In Scotland. The second home supplement really is a surcharge, adding an additional 4% to whatever tax is charged, as opposed to the English system of an alternative rate scale.

So whilst for England the government merely had to substitute a new rate table to reduce the surcharge, it will be more difficult to make a similar change in Scotland. 

As regards Wales and its Land Transaction Tax, please see our subsequent article..