Main Menu

Call for extension

Tax holiday leads to higher revenue for government

Kate Forbes

Kate Forbes has been urged to keep tax rates low

Tax relief on buying a new home during the pandemic has led to a surge in revenue for the Scottish government and prompted calls for it to be extended.

Last July Finance Secretary Kate Forbes raised land and buildings transaction tax thresholds – the point where tax is due – to help the housing market.

Although more people paid less tax, revenues from the last quarter went up by 32.1% on the previous year to £38.2m.

The figure for last month alone rose by 44% which was £18.4m more revenue than the equivalent number for December 2019.

In revenue terms, income from residential LBTT has increased from £119.1m in the last quarter of 2019 to £157.3m in the last three months of 2020. In December alone LBTT revenues were £60.2m from 13,580 residential transactions which was the highest ever recorded monthly figure.


The tax ‘holiday’ is due to end on 31 March but David Alexander, joint CEO of lettings firm Apropos, said the data provided further evidence that cutting tax helped to increase revenue.

“These figures show that reducing the tax level paid on residential housing transactions has actually substantially increased the revenue the Scottish Government has received,” he said.

“A near 50% year on year increase in revenue during December, at a time when there are few signs of growth in the economy, cannot be ignored.

David Alexander

David Alexander: ‘there is a case for easing the rates at all levels’

“The reduction in LBTT, effectively forced on the Scottish Government by the actions of Rishi Sunak lowering stamp duty in the rest of the UK in July, has resulted in substantial increases in revenue at a time when it is most needed to restart the economy after coronavirus.

“Indeed, there is a case for easing the rates at all levels. The Scottish government has previously insisted on maintaining higher tax rates compared to the rest of the UK for first time buyers, investors, landlords, and properties above a certain value.

“It seems, at best, disingenuous and, at worst, harmful to persist with policies which the Scottish Government knows produce lower revenues.

“Taxation should always be about maximising revenue generation to support society rather than political point scoring.”

Residential LBTT

The starting threshold for LBTT for residential property transactions was raised from £145,000 to £250,000 on 9 July last year until 31 March 2021.

Purchase priceLBTT rate
Up to £250,0000%
£250,001 to £325,0005%
£325,001 to £750,00010%
Over £750,00012%

Where the Additional Dwelling Supplement (ADS) applies, the change to the starting threshold will also apply to such transactions.

This means that a residential property transaction that is liable to the ADS will not pay the standard residential rates of LBTT on the first £250,000 of the purchase price, however the ADS will remain payable at 4% of the total purchase price.

Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.