money Buying property will cost more tax in Scotland than England
Homebuyers face paying hundreds of pounds more tax to buy a property in Scotland than England after the Chancellor doubled the threshold at which stamp duty kicks in south of the border.
Kwasi Kwarteng announced that with immediate effect they would not have to pay the levy on the first £250,000 of the purchase price, up from £125,000, in an attempt to boost the property market.
But the announcement did not apply in Scotland, where only the first £145,000 is exempt from the Land and Buildings Transaction Tax (LBTT), the SNP's replacement for stamp duty.
Homebuyers north of the border have to pay two per cent of the purchase price between £145,001 and £250,000, at which point the levy rises to five per cent.
The median house price in Scotland is £182,000 and the Chartered Institute of Taxation calculated that this would result in a £739 LBTT bill. A property of the same value would be exempt from stamp duty in England.
However, the average house price south of the border is much higher, at £292,118, attracting a stamp duty bill of £2,105 following the Chancellor's announcement. Scots would have to pay £4,205 of LBTT for a property of this value.
Stamp duty cut 'must be replicated in Scotland'
DJ Alexander Scotland, the country's largest estate agency, said the stamp duty cut "must be replicated in Scotland if there is not to be a growing divide between the housing market here and in the rest of the UK".
David Alexander, the firm's chief executive, said: "Scots already face much higher taxation when buying a home and any further reduction in the rates and increase in the threshold in England will only exacerbate what is already an unfair situation.”
He added: "If the Scottish Government does not replicate these announcements, then I fear that Scotland will be a less attractive place for people to live, to invest, and to grow the economy.”
Housebuilding industry body Homes for Scotland also highlighted the cut, along with the Chancellor's decision to raise the stamp duty threshold for first time buyers to £425,000 and measures to increase housing supply.
Jane Wood, the trade body's chief executive, said: "Today’s announcement goes to further highlight the policy divergence between Scotland and the rest of the UK.
“At a time when Scotland has an undersupply of housing approaching 100,000 homes, this is highly concerning in the context of attracting investment and ensuring that those delivering the homes that our country desperately needs are on a level playing field with their counterparts south of the border.”
Mr Kwarteng also announced the creation of new investment zones, where business will benefit from tax cuts and planning rules will be relaxed to encourage house building.
The Chancellor told the Commons he would work with the Scottish Government to deliver some north of the border "if they are willing to do so".
John Swinney, the Deputy First Minister, said SNP ministers would "have a close look" at the zones but warned they "have to be the right fit for Scotland".
He accused the UK Government of "borrowing to give tax cuts to the wealthy, lowering regulatory standards and inflating an already booming housing market".
But Liz Smith, the Scottish Tories' Shadow Finance Secretary, said the cut in stamp duty was a "positive move" and called for SNP ministers to "follow suit" by raising the LBTT threshold to £250,000.
