Property taxes in Scotland raised £714.2m over the previous 12 months, based on evaluation of the most recent statistics by DJ Alexander Ltd.
The assessment of the information by Scotland’s largest lettings and property company exhibits that Scottish authorities revenues from Land and Buildings Transaction Tax (LBTT) elevated by 18.2% over the earlier interval from August 2023 to July 2024.
The entire residential taxes collected for July 2025 alone had been the best ever, at £80.3m, with a report £52.3m from homebuyers and £28.0m from the extra dwelling complement (ADS) which is paid by second owners and property traders.
That is £110.0m increased than the £604.2m raised within the interval between August 2023 and July 2024. Of the most recent £714.2m tax determine, £221.3m was from the ADS, equating to 30.9% of the whole raised, and is £59.5m increased than the earlier 12-month interval.
Virtually all of the residential taxes raised arose from properties offered for greater than £325,001. The 19,560 transactions above this threshold collected £388.8m, or 78.9% of the whole £493.0m raised in LBTT (that is the determine for residential gross sales with the ADS figures eliminated). Which means the typical tax levied per transaction was £19,877.
David Alexander, the chief government officer of DJ Alexander Scotland, commented: “The tax take from Scottish homebuyers continues to achieve increased and better ranges with a report £80.3m in a single month. To place this into perspective, that is £12.2m increased than the determine for June.
“That nearly a 3rd of this – a complete of £221.3m – comes from landlords and second residence consumers signifies simply how essential this group is in sustaining excessive ranges of taxable earnings for the Scottish authorities. Regardless of rising taxation on this group from 6% to eight% final yr, there nonetheless appears to be an urge for food to purchase. The rise within the degree of taxation by 2% can solely partially clarify a tax take which has gone up by £59.5m in a single yr.”
Alexander continued: “But it surely have to be questionable whether or not this can be a sustainable, and even wise, technique of elevating income. This coverage was criticised earlier this yr in a report by the Institute for Fiscal Research (IFS) known as ‘Assessing Scottish tax technique and coverage’ which acknowledged that ‘Scotland’s enhance within the surcharge in land and buildings transaction tax (LBTT) on the acquisition of second and rental houses, from 6% to eight%…continued a development of will increase on this further dwelling complement’, and ‘the transfer makes an already extremely economically damaging tax even worse.’ It continued: ‘it’s not but clear what the Scottish authorities’s imaginative and prescient for tax coverage is – however will increase to LBTT usually are not in keeping with any economically wise technique’.”
“The IFS, and plenty of personal traders, understands that the present LBTT coverage is solely political posturing which makes little or no financial sense however performs as much as the concept punishing ‘the wealthy’ is the way in which ahead. The truth that these outlined as being wealthy is anybody shopping for a property valued at over £325,000 highlights the factual vacancy of this coverage and does little to handle the present housing points in Scotland.”
Alexander added: “Because the IFS report explains: The change will encourage owner-occupation however will make it much more tough and costly for many who stay within the rental sector – tenants (who’re more likely to face increased rents because of the coverage) in addition to landlords. And the coverage doesn’t simply penalise the rental sector; it penalises transactions throughout the rental sector. Stopping a landlord who needs to promote their property to a different landlord from doing so is unhealthy for each landlords and tenants.
“But these figures are additionally an indication of simply how resilient and full of life the Scottish property market stays. Certainly, the massive quantities of tax that are paid by property traders is testomony to their continued religion within the Scottish market. These taxes additionally don’t appear to be deterring homebuyers.
“However we want a degree taking part in area with our UK counterparts and we want – because the IFS and others have regularly identified – a correct tax technique in which there’s an inexpensive rationalization of why these taxes are so excessive and what wider advantages accrue for society and for financial progress. There have to be an alternative choice of elevating taxes through which one a part of the financial system – homebuying and property funding – doesn’t merely perform as a money cow to be taxed when required.”
Alexander concluded: “There could be little doubt that economies the place there are increased property and earnings taxes ultimately begin to deter people and corporations from investing sooner or later. Such insurance policies then shift from being considered progressive taxation and as a substitute act as a barrier and disincentive to progress.”
