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The extended cut to Stamp Duty for house-buyers south of the border will not be replicated in Scotland, Finance Secretary Kate Forbes has confirmed.
While Chancellor Rishi Sunak used his Budget on Wednesday to announce continued relief for property purchases, Forbes said the temporary reduction to Land and Buildings Transaction Tax (LBTT) – the equivalent of stamp duty in Scotland – would still end in March.
That was despite the Chancellor saying the Scottish Government would get an additional £1.2bn as a result of his Budget.
But Forbes said part of that cash had already been accounted for in the spending plans she announced at the end of January in the Scottish budget.
As part of that, the Finance Secretary said she had made the “big commitment” to extend business rates relief for a full year – adding that Sunak was only doing this for three months.
In Scotland, retail, hospitality, leisure and aviation businesses will pay no rates during 2021-22, Forbes pledged, saying this had been the “number one ask from business”.
But when asked if she would replicate extended reductions in stamp duty, Forbes said in Scotland the changes would end, as planned, on 31 March.
Last July, she announced the threshold at which buyers must start to pay LBTT would increase from £145,000 to £250,000 – a move which she said at the time would mean 80% of buyers would not pay anything under the levy.
That was announced in the wake of a similar announcement from the UK Government.
Yesterday, the Chancellor told MPs that the the stamp duty holiday – which had been due to end on March 31 – would now remain in place until the end of June, with a “tapered” period running until September.
That will mean the current “nil rate” stamp duty band at £500,000 in England and Northern Ireland will remain in place until 30 June.
Estate agents Rightmove estimated that about 300,000 transactions in England could benefit from that stamp duty extension, with buyers potentially saving an additional £1.75bn.
Asked about this on BBC Radio Scotland’s Good Morning Scotland, Forbes said there were no plans to replicate the extension north of the border.
“We will stick to that original plan, that was set out clearly. It was intended to support the recovery of the residential property market this financial year, that has been achieved.”
She added: “The nil rate band was already lower in Scotland, and yet we have seen record high levels of transactions and house purchases, so it has achieved its purpose.
“But, ultimately, when it comes to tax policy, I have choices. The number one ask from business was to extend the 100% relief on non-domestic rates, that’s what I have done alongside freezing council tax to help households in need so those are our choices in taxation.”
Scottish Conservative finance spokesman Murdo Fraser said the Scottish Government had made a “mistake” by not following the example of the UK Government, as he urged her to think again.
“Homebuyers in other parts of the UK are being given a very welcome helping hand during these challenging times,” he stated.
“Yet the SNP have decided not to give the same support to buyers in Scotland, despite receiving over £10bn in additional pandemic funding from the UK Government.
“This is a mistake, and the SNP Finance Secretary needs to think again. The consequences of this will be that many families in Scotland will be unable to move home.
“This also risks causing stagnation in the housing market at a time when we need to focus on reviving and rebuilding Scotland’s economy.”
The Scottish property sector has also reacted with dismay to the decision.
Anthony Conroy, regional director for Scotland at estate agency Yopa, said: “An estimated 80% of Scottish buyers have not had to pay any LBTT at all since the holiday was introduced, meaning Scotland has seen record high levels of transactions and house purchases, bolstering the market and wider economy.
“We appreciate that the homebuying process is slightly different up here, with Home Reports making buying and selling property smoother and chains less likely to fail – however, the cliff-edge date of 31st March will leave many sales vulnerable to fall-throughs and will leave lots of people disappointed.
“Even if Forbes wasn’t keen on extending the holiday until the end of June, it would have been nice to have seen some support in the form of a tapered approach.
“The Chancellor has announced the introduction of a nil rate band of £250,000 for the period 1st July 2021 to 30th September 2021 in England and Wales – we would have liked to have seen something similar in Scotland, to better support sales that are already in progress.
“Support for the housing market has largely been forgotten about in Scotland, which will disappoint the buying and selling public as well as all those working in the property industry – Kate Forbes has missed a trick here.”
David Alexander, joint chief executive of apropos by DJ Alexander, pointed out that the LBTT revenues from the fourth quarter of 2020 have increased by £38.2m, which is a 32.1% year on year rise compared with the final quarter of 2019.
“At a time when the Scottish economy needs as much financial support as it can get wouldn’t it be sensible and financially advantageous to continue with the stamp duty threshold starting at a higher level into the future since it is clearly raising more funds which can be used to pay for the NHS, education, and kickstarting economic growth,” he added.
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