Clarity needed on new land tax

By Donald Drysdale

23 January 2015

Donald Drysdale CA and Series Editor at ICAS Partner* Bloomsbury Professional - asks what shape will Land and Buildings Transaction Tax be in by 1 April?

In Scotland, Land and Buildings Transaction Tax (LBTT) will replace Stamp Duty Land Tax (SDLT) from 1 April 2015.  LBTT is the pioneering replacement of the old 'slab' structure with progressive rates, planting the seed for the fundamental reforming of SDLT in England and Wales from 4 December 2014. The shape of both taxes will be similar – and even after the changes announced on 21 January there will be significantly higher tax rates for many properties in Scotland.

Revenue Scotland, the new tax authority, were to have delegated the administration of LBTT to Registers of Scotland (RoS), the government body responsible for registering land titles, but plans have been changed at a late stage.  Revenue Scotland, still in the recruiting process, will now administer the new tax, but with the necessary IT facilities still in development, reports have questioned whether they will be ready by 1 April.

It has been suggested by some that LBTT systems may be ready in time to cope with straightforward transactions, but perhaps not capable of dealing with more complex scenarios.  Even if the introduction of LBTT is smooth and seamless, taxpayers and their advisers will need to adapt to the change.  New legislation will have to be understood, and new time limits for payment of the tax observed.  Care will be needed to ensure that land deals caught in the transition are accounted for correctly.

Will you know enough about LBTT?

The change from SDLT to LBTT is already complicated.  Although the preliminary legislation (the LBTT Act 2013) has been on the statute books for eighteen months, the sands have been shifting since then.  Many changes have been made recently by secondary legislation, while others – such as the proposed new sub-sale relief – are still awaited.

Although LBTT will be similar to SDLT in many respects, there will be significant differences and practitioners will want to be able to advise their clients on these.  What is needed is comprehensive guidance – at a general level for taxpayers and in much greater technical depth for accountants, lawyers and other tax specialists. Revenue Scotland are understood to be drafting such guidance but, for those who want to be well prepared, time is running out.

Authoritative, independent guidance

To help practitioners and their clients deal with immediate and future changes, Bloomsbury Professional are extending their Scottish tax list in February with a new book 'Land and Buildings Transaction Tax' by Ken Wright BA CA CTA, senior SDLT specialist with EY, who has wide experience of advising on the UK SDLT implications of all forms of property transactions in both private and public sectors and has taken an active role in the Scottish Government's consultation process around LBTT.

LBTT 

This new book, available in hard copy and also online as part of Bloomsbury Professional's Scottish Tax Service, is essential reading for practitioners dealing with transactions involving commercial and residential properties in Scotland, as well as academics wishing to observe the first crucial stages in the implementation of devolved Scottish taxes.

To find out how Bloomsbury Professional can help you keep abreast of Scotland's evolving tax regime, please visit their website.

*Bloomsbury Professional are working with ICAS to help practices and sole practitioners support their clients. If you want to find out more simply visit the ICAS website.

About the Author
Donald Drysdale, a former partner at KPMG in Glasgow and later Assistant Director of Tax at ICAS, is a freelance author. He is Series Editor of Bloomsbury Professional's Scottish Tax List and author of their Corporation Tax 2014/15 Annual.

Topics

  • Public sector
  • Private sector
  • Tax

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