At the end of April, the Scottish government was granted greater control over income and other taxes after the Scotland Bill was given Royal Assent.
The Bill, which has now become the Scotland Act 2024, is a significant transfer of fiscal power and gives the government control over how much the country borrows, how much income tax people pay and fees on property transactions.
It is a significant piece of legislation and if you are intending on buying a home in Scotland in the future, you must understand the implications it will have on the rate of stamp duty land tax you will have to pay.
The full devolution of stamp duty land tax means that the Scottish government will have complete control over taxes on land transactions. This includes both the design and administration of the tax.
It will be up to the Scottish government to decide whether to levy a tax similar to stamp duty or implement a tax it feels better serves Scotland’s needs.
The most likely date for the introduction of the Scottish tax is April 2015, according to HMRC. The government will be unable to levy the devolved tax until stamp duty has been switched off and the exact date for this is to be decided by HMRC and the Scottish government.
In terms of who will be affected by the charges, anyone purchasing property in the country will be liable for the tax, whether they are resident in the country or not and all monies raised will remain in Scotland.
As you can see, the Scotland Act could potentially have a significant impact on the rate of stamp duty land tax you have to pay.
Although the tax – in whatever form the executive decides – is unlikely to come into force before 2015, it is still important to consider its potential impact.
With mortgage lenders demanding huge deposits from borrowers, it may take you two or three years to raise the money you need, so the legislation is important.
There is no way of knowing which direction the government will take on the issue, however, it may still be a good idea to think about stamp duty mitigation and how it could potentially benefit you.
Mitigation – or planning as it is sometimes known – involves using loopholes in UK tax laws to reduce or avoid stamp duty altogether.
Stamp duty mitigation firms employ tax professionals who put schemes together that are in full compliance with UK law and are used by both businesses and consumers.
If you intend to use such firms, you should do plenty of research and enquire about success rates, defending the schemes against HMRC challenges and ensure that the company can make worthwhile savings for you.
With new legislation coming into force in the next three years, buying a home in Scotland and avoiding stamp duty may be more difficult than at present.
If you intend to buy in the next year or so, stamp duty mitigation could possibly help you.
It may also transpire that mitigation firms put together schemes that exploit loopholes in the new Scotland Act 2024, however, until it comes into force, there is no way of knowing for sure whether this will be the case.
However, mitigation firms will more than likely be developing plans for buyers in Scotland with the new law in mind, so it may still be worth you exploring.
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