Swinney on changes to property tax: nine out of 10 Scots will be better off

But after Chancellor George Osborne made changes to stamp duty in his Autumn Statement, Mr Swinney has now announced a series of alterations to LBTT before it has even come into force.

These will mean residential properties worth up to £145,000 will not now attract any tax, up from the previously proposed £135,000.

For sales between £145,000 and £250,000, a tax rate of 2% will be applied, with the introduction of a new rate of 5% between £250,000 and £325,000.

Mr Swinney had previously planned a tax rate of 10% on homes sold for between £250,000 and £1 million - prompting fears that those buying family homes could be hit.

But now the 10% rate will be applied to properties valued between £325,000 and £750,000.

The top rate of 12% - which was previously going to apply to houses worth more than £1 million - will now take effect from £750,000.

The Deputy First Minister said changes to Holyrood's powers meant he was the "first finance minister in Scotland in 308 years to set national tax rates".

But he said: "Even that experience didn't prepare me for the surprise of seeing the design of my national tax being replicated across the United Kingdom two months later by the Chancellor.

"The Chancellor of the Exchequer, having had years and years to reform stamp duty land tax, took two months to look at Scotland's reforms and said 'that looks like a good idea, I'm going to do that for the rest of the United Kingdom'."

He said he had now reviewed the tax rates and bands that would apply in Scotland under LBTT - but insisted he would "remain true" to the principles that lay behind the new levy, which comes in from April this year.

Mr Swinney said: "My priority was then, and remains now, to help first-time buyers to enter the housing market and to assist people as they progress through the property market. Consistent with the principle that tax should be proportionate to the ability to pay, the burden of taxation should fall on each according to their ability to pay."

He added: "As a result of my announcement today more than 90,000 taxpayers - nine out of 10 taxpayers - will be better or no worse off under the Scottish system than under UK stamp duty land tax."

He also claimed that "all those buying a residential property in Scotland for £330,000 or less will pay up to £400 less tax under LBTT, or will pay no tax at all".

Mr Swinney claimed "99.9% of residential transactions will pay less tax or no tax at all, compared to the proposed rates and bands in October", adding that only those buying a home for more than £945,000 would pay more as a result of today's changes.

He said: "With 50% of transactions lifted out of tax altogether, the measures I am proposing today send a very clear message.

"In exercising our first judgements on national taxes, this Government has put fairness, equity and the ability to pay at the very heart of the decisions we have taken."

Mr Swinney argued his spending plans for 2015-16 contained a "range of measures focused on making Scotland a more prosperous country, tackling inequality and protecting and reforming our public services".

The NHS budget will total more than £12 billion for the first time ever, he told MSPs.

The Deputy First Minister also said that £81 million was being earmarked for next year to "mitigate the most harmful impacts of the bedroom tax", pledging that ministers would work with others to "ensure that costs of delivery are kept to a very minimum in order to ensure maximum support is provided to those most in need".

Investment of more than £390 million in affordable homes is planned, with £30 million going on extending the Help to Buy (Scotland) scheme, which assists those buying a new-build home, so it can include smaller developers.

With a pledge to eradicate fuel poverty, Mr Swinney said £94 million allocated to domestic energy efficiency in 2015-16 would "add to the already hundreds of thousands of homes that are warmer and cheaper to heat as a consequence of our investments to date".

Overall, he said his Budget was "based on the Government's aspiration to deliver the more prosperous and fairer Scotland that our citizens so clearly demand".

Labour's finance spokeswoman Jackie Baillie called on the Government to spend £100 million on an NHS frontline fund and to provide more money for local government.

The frontline fund, to be paid for with Barnett consequentials, would ease pressure on A&Es and allow other services to operate seven days a week, she said.

"Earlier this week the SNP announced an additional £100 million for delayed discharge," she said.

"That is welcome but the pressure faced by the NHS isn't just about getting people out the back door - it's about dealing with pressures on the frontline."

Ms Baillie described "cuts passed on to local government" as "austerity plus" from the Government in Edinburgh.

"There is an urgent need now to act to protect our schools and our care services," she added.

She said Labour also wants a new independent watchdog to be set up to scrutinise the budget and have oversight of economic and fiscal projections, given the new powers over tax and spending coming to Holyrood.

Her party wants a Scottish Office for Budget Responsibility (OBR) to be established, stating that the Scottish Fiscal Commission is a "pale imitation" of what is required.

"A powerful Scottish OBR that draws from experience around the world is what we want for Scotland," she said.

"We should have no fear of transparency and scrutiny, and this is urgent as we need to build capacity in Scotland for an OBR that can provide an effective scrutiny mechanism from day one."

Ms Baillie said oil forecasts produced by the Scottish Government during the independence referendum campaign had proved inaccurate, adding that it had failed to see the current crisis in the industry coming.

"We need confidence that what the Government is predicting is as accurate as it can be," she added.

The Labour MSP also repeated calls for a resilience fund of at least £10 million in light of the oil crisis.

"This is not an oil fund... rather it is an emergency fund to help areas affected by significant job loss."

Turning to Mr Swinney's announcement on LBTT, she said: "Having announced his intentions at the tail end of last year to make this a fair and progressive tax, it took John Swinney just 100 days to change his mind - that must be the fastest U-turn in history.

"I am very happy to look at the detail of Mr Swinney's proposal. For our part we will support anything that helps homeowners and indeed the house building industry."

Mr Swinney's previous proposal for a 10% rate on homes between £250,000 and £500,000 was heavily criticised by the Conservatives as a "tax on aspiration".

The party had called for it to be halved, claiming it would hit middle-income families.

Finance spokesman Gavin Brown praised Mr Swinney for having been in "listening mode", and hailed what he described as a tax cut of around £64 million in relation to the rates set out in October.

He said: "Where I do have some concern is that we still have a sharp increase and we have a jump to 10% at a comparatively lower rate than we do in the rest of the UK.

"It raises up at £325,000 to the 10% rate which still, I have to say at first blush, strikes me as particularly low to move up to 10%.

"We acknowledge the points made by the Scottish Government that the housing market in London is different from Scotland, but at a UK level it doesn't go up to that percentage until £925,000."

He added: "It is still a tax on aspiration to a degree, to a lesser degree than it would have been, but the crossover point is a little bit higher than it was in October.

"We still think that there is scope to push that up further, not just to try to help people get the family home of their choice but actually because of the impact it could still potentially have on the market.

"I still think there is a possibility for distortions to occur."

Mr Brown said "penalising" the section of the market between £325,000 and £500,000 could have wider economic reverberations.

Liberal Democrat leader Willie Rennie said his party would work "constructively" with the Scottish Government to put the NHS, mental health and childcare at the heart of the Budget.

He also focused on a proposal from his party to raise the threshold for the repayment of student loans in Scotland.

Mr Rennie said: "It's a brave area for any Liberal Democrat to venture into these days but if it's the right policy to advocate it's something that I'm certainly going to do.

"We advocated that there should be no tuition fees in Scotland, we know there's a difference south of the border with the Government policy, but we argued for that.

"What we also want to see now is a raising of the threshold for repayment of student loans. In Scotland it's £16,910, in England it's £21,000. We would like to see that gap closed."

Green MSP Patrick Harvie urged the Scottish Government to provide more funds for councils coping with applications for hydraulic fracturing, or fracking, developments, and to increase spending on fuel poverty programmes.

He said: "Many councils may soon find themselves on the frontline of fracking developments, so it's vital that they have maximum ability to scrutinise this dirty industry. The Scottish Government needs to come off the fence on fracking and join the Greens' call for a moratorium on this dead-end industry.

"If the Scottish Government wants to create thousands of stable, clean jobs in the energy industry it need look no further than spending more on fuel poverty programmes to drag our housing stock into the 21st century.

"Ending fuel poverty in 2016 now looks like a hollow promise from the SNP, but it's not too late to inject new money and meet this challenge."