Land and Buildings Transaction Tax: First-Time Buyer Relief consultation analysis

Annex B - Scottish Government Response

The Scottish Government would like to thank all those who took the time to respond to this consultation. We welcome all information from stakeholders and individuals regarding views and perceptions of the Proposed Land and Buildings Transaction Tax ( LBTT) First-time Buyers Relief. The technical comments obtained have helped form an evidence base to inform the Scottish Government's approach to the proposed relief. The consultation has also added to the evidence concerning equalities and will inform the Equality Impact Assessment which will be published online.

Having given due consideration to the consultation responses, the Scottish Government has made a number of changes to its proposed approach. These are set out below and are reflected in the legislation laid before Parliament.

The Scottish Government has decided to remove the proposal to introduce a new definition of a "major interest in land" and instead rely on the definition set out in Section 60 of the Land and Buildings Transaction Tax (Scotland) Act 2013.

The Scottish Government also amended its approach on linked transactions, such that relief will be available where there is a linked transaction involving land that is, or is to be, occupied or enjoyed with a dwelling as a garden or grounds, or that subsists, or is to subsist, for the benefit of a dwelling, so long as the relief is being claimed in relation to that dwelling. However, where there is a linked transaction that does not fall within these categories the relief is to be withdrawn.

The draft Order has also been amended to confirm that relief will not be available if the transaction would be subject to the Additional Dwelling Supplement. In addition, the final proposed legislation reflects fully the Scottish Government's position on trusts and on alternative finance and specifies that the relief consists of the tax not being chargeable in respect of the first £175,000 of consideration payable in respect of any chargeable transaction.

Aside from these changes, the Scottish Government is content that no other changes are required in relation to the position set out in the consultation document. In particular, the Scottish Government is content that where there is more than buyer each must be a first-time buyer who intends to occupy the dwelling as the buyer's only or main residence. In considering whether or not a taxpayer is a first-time buyer, it is also considered appropriate to maintain a position on gifts, inheritance and trusts that is consistent with that in place for the Additional Dwelling Supplement.

Comments and queries raised by respondents regarding the operation of the relief and the production of guidance on relief are a matter for Revenue Scotland. The Scottish Government has however discussed its planned approach with Revenue Scotland.

As the Land and Buildings Transaction Tax is a self-assessed tax, the intention is for this relief to be calculated and claimed by individuals, and it is the responsibility of the taxpayer to complete and submit an accurate return. Equally, it is accepted practice that Revenue Scotland publish updated guidance and technical bulletins to assist taxpayers in complying with their statutory duties when changes are made to devolved taxes.

Following the results of the consultation Scottish Ministers intend to lay draft legislation in the Scottish Parliament to put in place the proposed relief.

Subject to the usual process of scrutiny and consideration by the Scottish Parliament, the relief will be available in relation to relevant transactions which occur after 30 June 2018. In keeping with the approach taken for other amendments, the legislation also includes a transitional provision. This sets out that, in addition to the effective date requiring to be after the relevant legislation comes into force, the relief will only be available for transactions where the contract is entered into after 9 February 2018. This is the date that the Scottish Government consultation on the proposed relief was published.

If approved by the Scottish Parliament, the Scottish Government and Revenue Scotland will carry out a range of activity through various channels to highlight the availability of the relief to stakeholder organisations and the wider public.