Income from property taxes in Scotland has risen by greater than 750% within the final ten years, contemporary evaluation by DJ Alexander reveals.
The property company, a part of Lomond, mentioned that income raised from the land and buildings transaction tax (LBTT) has elevated from £7m in April 2015 to £61m in April 2025.
The tax was launched ten years in the past and the circa. £7m raised from 6,880 transactions labored out at £1,017 per property sale. In April of this 12 months the £61m was from 8,100 transactions which is the equal of £7,530 per sale.
One 12 months after the 2015 introduction the Scottish authorities prolonged the tax additional to impose a further dwelling complement (ADS) on second properties and funding properties. In April 2016 this raised £1.5m however 9 years later this determine had risen to a document £22.4m representing 36.7% of all revenues raised within the month.
David Alexander, the chief government officer of DJ Alexander Scotland, commented: “The 750% enhance in revenues from LBTT have to be a document for any tax. To extend by that quantity over simply ten years is extraordinary.”
“That property taxes are levied extra severely in Scotland towards first-time patrons (FTBs), these shopping for properties price greater than £325,001, and second dwelling patrons and property traders shows a significant distinction in strategy between right here and the remainder of the UK. The perspective is that these are all honest targets and will be taxed at a a lot greater fee than their counterparts south of the border.”
He continued: “The expansion within the numbers is unbelievable and tells its personal story of how insidious the expansion of this tax has been. Since April 2015 – the primary month this tax was collected – there have been 6,880 transactions and £7m was collected which equates to simply £1,017 per sale.
By April 2025, £61m was collected from 8,100 transactions which is equal to £7,530 per property offered. I’m positive that when this tax was devised such numbers would have been unthinkable.”
“Have every other taxes or costs have risen by a lot in such a brief house of time? Clearly not however this doesn’t appear to discourage the Scottish authorities who imagine that this tax hits these with the broadest shoulders. That is outlined as those that purchase a property with a worth larger than £325,001 when the ten% LBTT fee applies. In England, this greater fee doesn’t kick in till a property is price greater than £925,000.”
“However it’s not simply these shopping for a £325,001 dwelling who’ve the broadest shoulders and should pay extra. First-time patrons (FTBs) in Scotland are additionally handled to greater taxes than their English counterparts. In Scotland LBTT begins at £175,000 for FTB’s whereas in England they don’t begin paying property tax till a house prices greater than £300,000.”
“Ministers might argue that should you can afford to purchase a £175,000 first dwelling or a £325,001 property then you may afford to pay a better fee of tax. It’s uncertain, nonetheless, that it is a credible argument given the extent of taxation and the start line. What now we have here’s a tax which disproportionately punishes Scots homebuyers in comparison with their close to neighbours.”
Alexander added: “The opposite aspect of this tax which galls so many is that there is no such thing as a apparent use of the cash to construct extra properties or cut back the impression of the present housing emergency. If homebuyers might see some apparent advantages from their generosity in paying these substantial further sums, then they might be extra accepting of this greater taxation.
“Hypothecating this extra taxation immediately into the housing sector might go some technique to no less than explaining why Scots – in any respect ranges from first-time patrons to different dwelling purchasers – are charged a lot extra for the basic proper to have a house.
“In the mean time there’s little rationalization of why this occurring and what the cash is getting used for. Maybe by the point of LBTT’s 20th birthday we will have a clearer rationalization. Within the meantime, we should merely pay up once we purchase a house.”
