The Finance Committee has agreed to undertake an inquiry considering the operation of LBTT in its first full year, including forecast revenues in comparison to outturn figures.
Background
The Scotland Act 2012 devolved Stamp Duty Land Tax (SDLT) to the Scottish Parliament. Stamp Duty was changed substantially to become the Land and Buildings Transaction Tax (LBTT) and the new devolved tax has been collected in Scotland since April 2015.
The Scottish Government confirmed the proposed rates and bands for LBTT in January 2015. These are set out in the following table:
The Deputy First Minister stated in a letter to the Session Four Finance Committee[1] that “the Scottish Government has placed fairness, equity and the ability to pay at the very heart of the decisions we have taken on national taxes” and that “these revised rates and bands prioritise support for first time buyers and are intended to assist people moving through the property market.”
Forecast versus outturn figures
The forecast revenues for LBTT for 2015-16 broken down by month are available in the Scottish Fiscal Commission’s Report on Draft Budget 2016-17 via the following link: http://www.fiscal.scot/media/media_437935_en.pdf (pages 10 and 20).
Monthly outturn figures for LBTT for 2015-16 are available on Revenue Scotland’s website via the following link: https://www.revenue.scot/about-us/publications/statistics
In addition to revenues generated by LBTT, the Scottish and UK governments have agreed that the baseline adjustment to the Scottish block grant would be reduced by £20m for one year only to take account of the estimated impact of forestalling (whereby homeowners shifted the timing of property transactions when the tax was introduced).[2]
Call for evidence
The Committee is interested in hearing views on the first full year’s operation of LBTT. In particular, the Committee would be interested in hearing views in respect of the following issues—
- The impact on both the residential and commercial property market of the various rates and bands.
- The extent to which the rates and bands are consistent with the principles of “fairness, equity and the ability to pay”;
- The level of receipts for residential and non-residential transactions in relation to the forecasts;
- The impact of forestalling and whether it is likely to have a short-term impact only or lead to longer-term changes in the market;
- Whether there should be any changes to the rates and bands in the draft budget for 2017-18;
- The performance of Revenue Scotland in administering and collecting the tax.
How to submit your evidence
The closing date for responses is Friday 26 August 2016.
All responses should be sent electronically (in Word format – no confirmatory hard copy required) to [email protected]. Written responses will be handled in accordance with the Parliament’s policy for handling written evidence received in response to calls for evidence. All written evidence received may be published by the Parliament and will be treated as a public document. If you wish to submit evidence in confidence or anonymously please read the policy at the link above.
What happens next?
The Committee will be considering those witnesses from whom it wishes to hear oral evidence in due course, informed by the written evidence received, in order to help inform its scrutiny of Draft Budget 2017-18. Oral evidence sessions are expected to take place in the autumn.
Contact
Should you require alternative formats of this information or further assistance in making a written submission to the Committee, please do not hesitate to contact the clerking team of the Committee via the email address above or by telephone on 0131 348 5409.