Rethink on new Scottish property tax rates John Swinney LBTT
Finance Secretary John Swinney has announced changes to the tax rates for the proposed new property tax in Scotland.
Changes to the Lands and Buildings Transaction Tax (LBTT), which replaces stamp duty from April 2015, will mean that house purchases costing less than £145,000 will be tax free in Scotland.
Mr Swinney's original LBTT plans, announced in October last year, raised the threshold for paying tax on a home from £125,000 under stamp duty to £135,000.
Marginal rates will range from 2% up to a top rate of 12% for people buying houses costing more than £750,000, instead of the planned £1 million.
A similar system has since been introduced for the rest of the UK, with a lower rate of tax for properties in the upper end of the market than in Scotland.
Mr Swinney said that the new tax rates will mean that around 10,000 house purchases currently liable for UK stamp duty will be exempt from tax and over 40,000 buyers will pay less on the purchase of a new home.
Mr Swinney said: "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.
"Tax rates should also be designed to support the Scottish market. The average house price in Scotland is £170,000. The average detached house is around £244,000. In contrast the average house price in London is £510,000.
"With 50 per cent of transactions lifted out of tax altogether, the measures I am proposing today send a very clear message."
The new property tax will be the first time in over 300 years that a Scottish Parliament has exercised its powers on national taxes.
The LBTT rates and bands are still to be approved by the Scottish Parliament. The Scottish Government will seek Parliament's approval of formal rate-setting Orders in early February.
Rest of the UK stamp duty
Up to £145,000: 0%
Up to £125,000: 0%
£145,000 - £250,000: 2%
£125,000.01 - £250,000: 2%
£250,000.01 - £325,000: 5%
£250,000.01 - £925,000: 5%
£325,000.01 - £750,000: 10%
£925,000.01 - £1,500,000: 10%
Data table courtesy of BBC