LBTT revenue drops for first time since May

Latest official figures released by Revenue Scotland reveal a fall in revenue of Land and Building Transaction Tax (LBTT) for the first time since May, the Scottish Property Federation has found.

Despite this, largely due to the strength of the second homes tax (the Additional Dwelling Supplement) the government will be pleased that the overall revenue is better in the first half of 2017-18 than in the previous two years of LBTT, the SPF said.

The figures fell £2.1m in September to £49.8m due to a decrease in residential transactions and a fall in income from the Additional Dwellings Supplement.

Despite the decreased monthly revenue, compared to September in 2016, the total revenue has increased by £11.9m.

To date, 2017 has seen a total LBTT revenue of £281.6m, a significant rise compared to the same period in 2016/2017 of £222.9m and £183.4m in 2015/2016.

David Melhuish, director of the Scottish Property Federation, said: “September has seen the first fall in LBTT revenue since May. Although not by a huge amount, the fall was mainly due to a fall in revenue from higher value residential transactions in September.

“We continue to be concerned that the high rate of tax (10%) which kicks in with properties valued between £325,000 and £750,000 is deterring would be sellers and consequently depressing the supply of these properties to the market – this 10% tax threshold should start from no less than £500,000 in our view.”

“The SPF is also concerned at a lack of higher value transactions in the commercial property markets:

“The revenue from the commercial side of LBTT looks set to miss its £224m government forecast by a significant margin, having only accrued £79.2m in the first half of the tax year.

“The SPF remains concerned at these figures as Scotland’s commercial property market continues to show low levels of activity at the higher value levels. This suggests there is currently not enough depth to the markets and a lack of new property development in particular.”