Law Society of Scotland responds to two Scottish Government consultations on Land and Buildings Transaction Tax (LBTT)

The first consultation relates to first-time buyer relief from LBTT. The proposed change would raise the zero tax LBTT threshold for first-time buyers from £145,000 to £175,000. As the tax is progressive, first-time buyers buying a property above £175,000 will also benefit from the relief on the portion of the price below the threshold. The LSS welcomed the proposal for introduction of this relief, while noting that the figure of £175,000 proposed would increase the differences with other equivalent tax regimes in the rest of the UK. As part of the consultation process, the LSS suggested that an annual Finance Bill in Scotland would be a useful way to ensure that technical issues or relatively minor changes arising through the devolved tax system could be addressed regularly and efficiently.

The second consultation relates to a proposed amendment to LBTT ‘Group Relief’. The proposals are to allow group relief to be claimed where there is a land transaction between one company and another company within its corporate group structure, where a share pledge or equivalent arrangement is in place. The policy intention is to match the relief to that available in England and Wales so that Scotland is not at a competitive disadvantage in business. At the time that the LBTT legislation was introduced, it was presumed that group relief would be available in these circumstances. Accordingly, the LSS welcomed the proposals and called for these measures to have retrospective effect to ensure that Scotland is not at a disadvantage. By way of contribution, the LSS raised concerns over clarity on drafting and the effectiveness of the draft instrument. 

As one of Scotland’s devolved taxes, LBTT is, and will continue to be, a key focus of work for the LSS Tax Law sub-committee.