Although not applicable to Scottish buyers, one of the biggest shock announcements of the Autumn Budget at the end of October was the hike in stamp duty for second-home owners and buy-to-let purchasers, such as landlords, in England and Northern Ireland. It rose immediately from 3% to 5%.
The stamp duty due on other residential property transactions will also increase as SDLT thresholds reduce from next April. This will bring them more in line with Scotland’s existing Land and Buildings Transaction Tax thresholds.
In Scotland LBTT, which replaced UK Stamp Duty Land Tax (SDLT) in April 2015, is payable on purchases above £145,000. In England and Wales SDLT will be payable from £125,000 from April rather than the £250,000 threshold it was at before.
The threshold for first-time buyers for first-time buyers in England and Northern Ireland will fall to £300,000 rather than the £425,000 rate before. This compares to a lower threshold of £175,000 for LBTT in Scotland.
However, the major factor here is that Scotland property is generally cheaper – with an average price of £197,953 for Scotland in October, according to Rightmove. That means that even for first-time buyers buying an average priced property the LBTT payable will be minimal. And that gives buyers even more reason to buy in Scotland if they want to avoid high land duty taxes.
It also means that landlords in the UK may look for opportunities to invest in Scotland to avoid the higher stamp duty cost of England and Northern Ireland. Rental demand continues to remain strong in Scotland, which has housing shortages across the country.
An extra £3.4bn in Treasury Funding
In her first Budget, Chancellor Rachel Reeves unveiled a record £47.7 billion for the Scottish Government in 2025/26. That includes an additional £3.4 billion in Treasury funding through the Barnett formula. Of this extra money, £2.8 billion is for day-to-day spending and £610 Million is for capital investment. An additional £1.5 billion was also announced for the current financial year.
Reeves said this should be used to “deliver the public services that the people of Scotland deserve.” The SNP government in Scotland will announce their own tax and spending plans for next year at the beginning of December when Budget implications will become clearer.
In the October announcement, the UK government also unveiled funding for Green Freeports, City and Growth Deals, GB Energy and hydrogen projects that it said: “could fire up growth and deliver good jobs across Scotland.”
Improvements in personal affordability
Personal affordability should also increase with rises in minimum wage, state pensions and freezes on fuel duty all helping to increase the cash in consumers’ pockets. For lower-paid workers, the National Minimum Wage rise will deliver an additional £2,500 boost to their annual income, while workers aged 21 and above will see a further £1,400. There were also changes to the weekly earnings limit for carers allowance. In Scotland that benefit will be replaced by the Scottish Government’s Carer Support Payment later this year.