10th October 2014
Scotland has introduced a new ‘mansion tax’ that will fund a cut in stamp duty on affordable homes.
A new land and building transaction tax will be brought in next April which will see homes costing over £1 million pay stamp duty of 12% rather than the 7% that is levied under the UK system.
The new tax will be ‘progressive’ rather than the ‘slab’ system currently in operation that sees a £250,000 property attract a 1% rate but a property worth £250,001 pay 3%.
Purchasing a £1 million home will now cost £78,300 in tax, compared with the £50,000 currently paid. The extra cash raised from the mansion tax will pay for a cut in the sales duty for those buying cheaper properties.
House sales under £135,000 – £10,000 above the current stamp duty threshold – will be exempt from the tax. The new rates of tax will be levied on those buying a property worth more than £325,000 meaning the average family in Scotland will be paying less tax.
Mansion tax has been a popular topic for politicians in Westminster, with Labour and the Liberal Democrats vowing to impose an annual tax for those purchasing properties worth £2 million or more.
How the tax will be levied has been undecided. Some have called for the revaluation of council tax bands and the introduction of a new band to collect the tax and others have said a more practical solution would be to make those with expensive properties declare it on their self-assessment tax forms each year.