Scottish Government warned Stamp Duty reform plan could hit investment in Scotland
INVESTMENT in Scottish businesses could be hit under planned reforms to Stamp Duty being proposed by the Scottish Government, according to a new expert analysis.
Business services group PWC has found that under the plans the sale of major multi-million-pound developments would be hit with far higher tax bills that could deter potential purchases.
The reforms are being considered for 2015, when responsibility for Stamp Duty will be transferred from Westminster as part of the measures agreed in the recently-enacted Scotland Act to give the Scottish parliament greater tax-raising powers. Under the plans for what will become known as the Land and Building Transaction Tax, Stamp Duty on property sales above £250,000 would increase to 4.4 per cent. Currently, the rate is 3 per cent for properties between £250,000-£500,000 and 4 per cent on property sales above £500,000.
The new system is geared to slash the tax rate on smaller commercial deals with bigger properties paying more of the burden. Ministers have suggested removing tax altogether on small purchases below £225,000, to help small businesses.
PWC analysed recent deals in Scotland to see what difference the changes would make. Its report says the recent sale of Ocean Terminal in Edinburgh would be liable for an extra £370,000 in tax if Holyrood ministers decide to stick with their initial plans.
Similarly, the tax bill incurred by the recent sale of 141 Bothwell Street in Glasgow would go up from £2.84 million to £3.1m. Business chiefs said last night that Scotland needed to guard against gaining a reputation as an expensive place to invest.
A spokesman for CBI Scotland said: “Commercial property investors often have a choice of locations in the UK or indeed abroad for their investments and they rigorously evaluate the post-tax returns on the options available to them.
“It would be concerning if this new tax made it more expensive to invest in Scotland, especially as the Scottish Government’s £95m business rates retail levy has already made it more expensive for larger retailers to invest here than elsewhere in the UK.”
Susannah Simpson, tax director at PWC in Scotland said: “It is important that the government confirms its intentions with regard to rates, thresholds and the scale of revenues to be collected and that these are seen to encourage both private investment and commercial and industrial development.”
“Illustrations as to how the LBTT rates might work could mean that more tax is payable under the new system for properties purchased above £300k.”
A Scottish Government spokeswoman said: “Ministers have made it clear they will set the rates and thresholds for the land and buildings transaction tax nearer the time when it will come into being, in April 2015, and in the light of the prevailing economic circumstances.”
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Sunday 19 May 2013
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