Scottish property transaction tax analysis

New figures allow us to more accurately analyse where Land and Buildings Transactions Tax (LBTT) revenues have come from, and to see just how much each individual tax band has contributed to total tax take.

Every month Revenue Scotland, the tax authority responsible for the administration of Scotland’s devolved taxes, publishes statistics on the tax revenue raised as a result of LBTT, Scotland’s replacement to Stamp Duty.

The latest figures make for particularly interesting reading. Not necessarily because of the sums involved (although these have been steadily ticking upwards since its introduction in April 2015), but because, for the first time, the organisation has published a breakdown of tax returns and volumes by price band.

The chart below shows monthly receipts, split by property value. It’s worth noting that currently the breakdown excludes the revenue collected as a result of the Additional Dwelling Supplement (ADS), under which individuals purchasing additional properties such as second homes or buy-to-let investments pay an extra 3% surcharge.

What the data confirms is just how reliant LBTT revenue is on the top two tax brackets, especially the market between £325,000 and £750,000.

Indeed, since its introduction 54% of the total revenue collected has come from properties purchased in this price bracket, despite such sales only accounting for 7% of the total number of transactions over that period.

At the top end of the market, sales over £750,000 have accounted for 16% of LBTT revenue yet make up less than 1% of transactions.

Taken together, this means that sales above £325,000 have accounted for just over 7% of transactions across Scotland since April 2015, but 70% of LBTT revenue.

LBTT band

% of transactions

% of revenue (excl. ADS)

up to £145k

53%

0%

£145k – £250k

31%

14%

£250k – £325k

8%

16%

£325k – £750k

7%

54%

£750k+

0.4%

16%

 

Why is this important? Simply put, this narrow focus of tax revenue places a bigger burden on a smaller percentage of buyers. As a result, any significant changes at the top of the market have the potential to have a disproportionate impact on overall tax take.

Our latest research on the prime Scottish property market is here and an update on the Edinburgh City market can be found here.

In total, since April 2015 LBTT has raised £352 million, increasing to £412 million when you include the revenue raised through the Additional Dwellings Supplement (ADS).

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