When the Welsh Government was developing the commercial aspects of the land transaction tax, what considerations were given to the impact that the reduced Scottish land and building transactions tax of 4.5 percent for buildings over £350,000 has had in increasing investment in Scotland?
The Welsh Government took account of a wide range of relevant evidence from across the UK and elsewhere when developing land transaction tax policy. Land and buildings transaction tax (LBTT) in Scotland has been lower than stamp duty land tax (SDLT) in the rest of the UK for non-residential transactions over £300,000 since March 2016, when the UK Government changed SDLT non-residential tax rates. In 2016-17, non-residential LBTT revenues fell by 19 per cent, which seems to have been driven by a reduction in high value transactions.
Therefore the evidence from Scotland does not show that having relatively low top rates of tax will increase high value transactions and investment. The commercial property sector is volatile and influenced by multiple factors, other than just tax. The Welsh Government will monitor the impact of its tax rates closely, as well as continuing to assess relevant evidence from elsewhere.