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The new property tax rates due to replace stamp duty in Scotland in April are being reviewed amid concerns that families buying in areas like Edinburgh face unfair bills. Finance Secretary John Swinney is currently examining the rates for the proposed Land and Business Transactions Tax (LBTT) and will announce his conclusions to the Scottish Parliament on Wednesday when MSPs are due to debate the Scottish Budget Bill. The LBTT rates were announced last year before the UK Chancellor George Osborne changed the stamp duty system nationwide. It raised the threshold for paying tax on a home from £125,000 to £135,000 but increased the amount to 10% on homes above £250,000 and up to £1 million. However, Osborne has now replaced the slab style stamp duty bands with a graduated rate which means some purchasers benefit more under the stamp duty system. Swinney said his proposals were designed for the Scottish market, not London house prices, with 90% of home buyers better or no worse off and 5,000 homes would be taken out of taxation all together. ‘The Chancellor's decision to introduce a new stamp duty system overnight, without warning and consultation, means that while 80% of home owners continue to pay less tax or no tax at all under the Scottish system we now have the opportunity to review the rates and ensure they are right for Scotland,’ he explained. The Conservatives have proposed that no tax be levied on house sales under £140,000, and that the 10% tax on homes between £250,000 and £500,000 be halved. ‘The eye watering 10% tax rate has caused concern in many parts of Scotland and is having a distortion on the housing market,’ said Conservative party finance spokesman Gavin Brown. Property industry experts have welcomed the move, saying that the original bands were too skewed towards extracting funds from the top end of the market. John Boyle, director of research and strategy at Rettie and Co, said that it was important that the Scottish government listened to people working in the industry and took their views on board. ‘We argued that the 80% Who would save money through what was proposed would save what amounted to a few hundred pounds, while the 20% who would pay more would be unfairly hit,’ he pointed out. ‘People in Edinburgh, Aberdeen and parts of Glasgow would all have been affected and it would have been a bit punitive on buyers in these areas. Trying to buy a family property in these cities for less than £250,000 is pretty difficult, and very few family homes sell for less than this,’ he added. One of the major complaints with the tax was the proposed jump from 2% on properties sold between £135,000 and £250,000 and a 10% rate on purchases above £250,000 and up to £1 million. ‘It would be reasonable to have a 5% or 7% bracket before you get to the 10% level, and we would expect this to be brought… Continue reading →
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