Scots ‘will not pay tax on new homes under £250,000’

Finance secretary Kate Forbes also announced that a further £50m will be made available to help first time buyers.

Scots buying a new home will not pay tax on properties sold for less than £250,000, finance secretary Kate Forbes has announced.

She followed the example of UK chancellor Rishi Sunak by raising the threshold for Land and Buildings Transaction Tax (LBTT).

Sunak announced stamp duty will not be applied to sales of properties under £500,000 in England, but Forbes said increasing the threshold in Scotland to a lower amount allows her to also make an additional £50m available to help first-time buyers.

She confirmed the move – as well as £100m of spending this year for employment support and training – as she responded to Sunak’s summer economic update.

On Wednesday, the chancellor announced a series of measures aimed at reviving the UK economy as the country eases out of coronavirus lockdown restrictions.

Forbes welcomed some of the measures – such as a reduction in VAT for the tourism and hospitality sector – but she also claimed the UK Government had failed to listen to pleas from Holyrood ministers for further fiscal powers.

She said that means her Government’s response to coronavirus is still “heavily dependent” on what is done at Westminster.

Forbes argued: “The fiscal powers we are seeking would enable the Scottish Government to respond to Covid-19 more effectively and reboot our economy.

“They are relatively limited powers, I am still not quite sure why we are debating it.

“But they would ease some of the immense pressures on our budget and give us more tools to kick-start our recovery.”

Announcing an increase in the LBTT starting threshold from £145,000 to £250,000, she said the change cannot be made immediately – as has been the case in England.

Conservative MSP Donald Cameron said there “remains a significant disparity” between Scotland and the rest of the UK on property taxes.

He urged Forbes to “explain why she is not committing to a fully equivalent cut for LBTT and also explain why it cannot be done immediately”.

The minister said preparing the legislation to bring in the change will take time, as will preparing Revenue Scotland for the new set-up.

However Forbes pledged to work to “enable this to come into force as soon as possible”.

The change will mean about eight in ten house buyers in Scotland will not pay LBTT.

Sunak said on Wednesday that the stamp duty change in England will benefit nearly nine out of ten buyers.

Forbes said the Institute for Fiscal Studies has warned first-time buyers may be worse off because of the UK Government’s changes, and she pledged a further £50m for the Scottish Government’s First Home Fund.

That is a shared equity scheme that can provide first-time buyers with up to £25,000 to help them get on the property ladder, and Forbes said her announcement means an additional 2,000 buyers could be helped.

She said: “By taking a distinctive approach in Scotland to raising the starting threshold under LBTT, I am able to target further support elsewhere and to target it where the UK Government failed to provide funding to devolved administrations.”

While Sunak’s statement set out to support jobs, Forbes said she believes “much more support is required for the labour market”.

She told MSPs: “That is why I am committing today we will make an additional £100m available this year for targeted employment support and training to help keep people in work or help them retrain.”

She said the funding is “unlikely to be all we will need to do to support employment and skills next year”, and added it is a “first step”.

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