The Scottish Government has cut its Land and Buildings Transaction Tax (LBTT) to lift around 80 per cent of house buyers out of the charge.
The government is increasing the property value at which the charge becomes payable from £145,000 to £250,000.
However, the change is not being introduced immediately. Instead it will come into force “as soon as possible”, allowing legislation and Revenue Scotland to be prepared.
As a result, the original rates for 2019-20 remain in place for the moment, meaning the value of properties sold between £145,001 and £250,000 will be taxed at two per cent.
Once live the new threshold will remain in place until 31 March, mirroring the period of the temporary stamp duty cut announced for England and Northern Ireland yesterday.
Rates for the Additional Dwelling Supplement and non-residential LBTT also remain unchanged and are applicable as before.
The SNP government said home movers purchasing a property costing more than £250,000 would save £2,100.
It also announced an extra £50m for its First Home Fund, which is a shared equity scheme providing first time buyers with up to £25,000 to buy a property.
It estimated this will support around 2,000 first time purchases and increase the total funding to £200m.
Help stimulate housing market
Finance secretary Kate Forbes (pictured) criticised UK government chancellor Rishi Sunak for not going far enough to support the economy in his announcements yesterday, saying it limited the action she could take.
“Nevertheless, I can confirm several important new steps we will take,” she said.
“I have listened to calls to raise the starting threshold for LBTT to help stimulate housing market activity and the economy.
“Today’s changes will benefit house buyers and are focused directly on the particular needs of the Scottish economy.
“To ensure first time buyers can also benefit, I will provide an additional £50m this financial year to directly support them to get on the property ladder.”
She added that UK-wide employment schemes will apply in Scotland but a further £100m was being invested in targeted employment support and training.
Owain Thomas is features and contributing editor of Mortgage Solutions and editor of Specialist Lending Solutions.
He also has experience in the protection, pensions, workplace benefits and HR areas.
Owain has won two Headline Money Awards and the Protection Review’s Journalist of the Year award.