A DOWNTURN in the sales of higher end homes and commercial properties has left a £100 million black hole in Scotland’s public finances.
The replacement for stamp duty north of the Border was expected to generate more than £538 million into the Government pot, to be spent on public services.
But the failure of many owners to sell more expensive properties and business premises, which would have generated far more than the sale of cheaper houses from the Land and Buildings Transaction Tax (LBTT) is well below the target set by ministers.
READ MORE: Trust in SNP government falls as voters prioritise economy
Revenue Scotland figures reveal that LBTT receipts are still £100.6m short.
Experts are doubtful the gap will be closed before the end of the Government’s fiscal year next week, with February generating the lowest LBTT revenue of any month during 2016/17.
The Scottish Property Federation (SPF), which analysed the data, warned the Government will “struggle” to meet its target, and called for the tax brackets to be changed to help stimulate growth in coming years.
LBTT was brought in to replace Stamp Duty in 2015 on both commercial and residential property, and immediately eased the tax burden on the majority of house purchases by moving the bill on to high-value sales.
There is no LBTT charge for the first £145,000 of a house purchase, but it is levied at two per cent between £145,000 and £250,000, then five per cent between £250,000 and £325,000, then 10 per cent between £325,000 and £750,000, and at 12 per cent above £750,000.
SPF director David Melhuish, said: “Revenue for February has been the lowest to date for LBTT, which will be extremely disappointing for the Scottish Government.
“£100.6m still has to be raised by next month in order to meet the £538m target set at the beginning of the tax year, a figure we fear will be a struggle.”
“This isn’t a great surprise as there has been a much lower level of commercial property sales, but the evidence from members also tells us that the higher value residential markets continue to struggle across much of the country.
“So we continue to call for the 10 per cent tax threshold to be raised from £325,000 to £500,000 in order to support greater numbers of transactions at these levels of the market.”
READ MORE: Trust in SNP government falls as voters prioritise economy
One piece of good news for Holyrood accountants was an increase in the amount collected through the LBTT levied on second homes introduced by John Swinney last year.
Tax from the Additional Dwellings Supplement (ADS) in February stood at £7.4m compared to £7.1m in January, with £82.7m raised this year.
Mr Melhuish added: “The position for the Government would be a lot worse without the new additional homes LBTT tax.”
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