The Nationwide has welcomed the introduction by the Scottish Government of the Land and Building Transactions Tax.
The UK’s largest building society views the new structure as a positive move away from the distorting effect of ‘cliff edges’ affecting purchasers faced with Stamp Duty.
Andrew Baddeley-Chappell, Nationwide’s head of policy and governance for mortgages and savings, said: “This is a positive step to replace the inefficient slab structure of stamp duty. This means the Scottish housing market will no longer be impacted by the market ‘cliff edges’ that occur with stamp duty, where the number of transactions falls significantly immediately after each threshold is passed.
“The move announced today will particularly benefit first time buyers and those who are buying smaller properties, as the threshold above which the tax will start be paid has been set at £135,000, which will exclude a significant number of homes in Scotland.
“Nationwide has previously called for the removal of the slab structure from stamp duty and hope that if the new Scottish tax is shown to have positive benefits, stamp duty will be reformed in the same way across the rest of the country.”
Land and Buildings Transaction Tax (LBTT) will replace Stamp Duty Land Tax, which will remain in place in the rest of the UK, for property transactions throughout Scotland. It is the first tax put in place by a Scottish Parliament for more than 300 years.
Instead of the hard thresholds associated with Stamp Duty, LBTT offers a more progressive system. Higher tax rates will only apply to the value of the property over each threshold once it is crossed, instead of applying to the whole value of the transaction each time it reaches a threshold, as with Stamp Duty.
The tax will not apply to homes valued at less than £135,000 which excludes just under half (approximately 45%) of homes in Scotland. It will apply to all transactions undertaken from 1 April 2015.