Posted: Thursday 14 June 2012
Replacement of Stamp Duty Land Tax in Scotland
By Hugh Angus
Last week I commented on some Scottish Government proposals that many will have doubts about. The following day there was a consultation paper issued which was mostly quite sensible. This was on the replacement of stamp duty land tax with a “new” devolved tax called a Land and Buildings Transaction Tax.
Most comments so far have been on the question of whether to replace the “slab” structure, where the tax goes up in bands, or replace the rates with a more progressive rate. That is an interesting economic point. For all the many complaints about the existing “slab” structure taxes are all about raising revenue and for the new tax to be neutral in effect, and the slab system to be replaced, headline rates for higher value residential and commercial property would need to rise. In the current climate reducing the rates would not have a big impact on transaction numbers. That is up to the banks and other financial institutions.
The stated intention in the paper is for substantially the same structure and reliefs to be maintained. This will enable economic consistency across both jurisdictions. The focus, as it should be, is on tax rates.
However as a Scots property lawyer SDLT, and its predecessor stamp duty, could be difficult to deal with as they were always drafted on the basis of English property law. The two systems have never been unified (though 1,000 years ago they were quite similar) and whenever there was a change in the law to pick up an English law driven tax planning scheme it took months to sort out the unintended consequences in Scotland.
Accordingly the detail of the proposal is actually very conservative and will make little difference in practice, though it is projected to make a small saving in administrative costs. If anything I would have preferred a more radical restructuring of the administrative procedures. The figures in the paper show that of the transactions which require a tax return only 25% produce payment of tax. Why should taxpayers have to pay lawyers to fill in the remaining 75% of 12 page returns?
