Gift that keeps on giving for Scottish Government

Property taxes are the gift that keeps on giving for the Scottish Government, with revenues continuing to rise and now on the brink of breaching £700 million a year. The latest collection figures for the Land and Buildings Transaction Tax (LBTT) show that £686.5m was raised in the 12 months from March 2024 to February 2025.

To put this is perspective, this is more than £13m a week contributed to Government coffers by people who simply want to buy a home. What is more remarkable is that such buyers are regarded as being those with the broadest shoulders and therefore those who must pay more for the privilege of homeowning.

Given that these taxes are levied at 10 per cent for homes costing more than £325,001 this is hardly at a level most would regard as rich.

Indeed, most of those who have to pay this tax will also have to pay higher personal taxation, which begins at just under £29,000.

With average incomes in Scotland around the £38,000 mark it means that those who are being charged much more than their peers south of the Border are not living an extravagant millionaires’ lifestyle but are, instead, simply people doing necessary jobs and trying to make their way in the world.

These are the incomes of plumbers, chefs, sales managers, senior drivers, and administrators. An even higher tax band impacts upon nurses, teachers, and police officers. These are people who are keeping the country going yet who are disproportionately penalised if they dare to want to earn a living or buy a home.

The further concern is where the two-thirds of a million pounds collected in LBTT is going. If the taxes are simply being absorbed into a general pot with no specific connection to housing, then a lot of people may feel this is an unfair, poorly directed tax. People need to believe additional taxes are being used effectively and meaningfully.

It is essential that if you are going to charge people more you must provide a reasonable explanation of why they are paying more and where the funding is going.

Given our current housing emergency, it would be prudent to show that at least some of the LBTT funds are going toward resolving this situation and investing in the housing market.

Equally, some thought must be given to those who pay the additional dwelling supplement (ADS), which raised £205.6m of the £686.5m total taxes raised.

This tax is charged on second homes and properties purchased by landlords and property investors to rent and represents 29.9 per cent of the total raised and is £43.8m higher than the previous 12-month period.

Some acknowledgement that it is a very positive situation that people continue to be happy to invest in Scotland despite the punitive taxation would be welcome.

But caveats aside, this is a positive story as it once again highlights the resilience and dynamism of the Scottish property market, which continues to outperform the rest of the UK. Whether our separate higher taxes on property and income impact negatively on the Scottish economy in the future is still to be seen.