Scotland politics

New Scottish property and landfill tax rates set to be outlined

Cash Image copyright Thinkstock
Image caption The two taxes are expected to bring in between £500m and £600m each year

The first Scottish tax rates in more than 300 years are set to be outlined in the next Holyrood budget.

The draft budget, detailing the Scottish Government's spending proposals, will be presented by Finance Secretary John Swinney on Thursday.

It will include plans to replace stamp duty and for a Scottish landfill tax.

The budget incorporates new taxation and borrowing powers transferred to the Scottish Parliament through the Scotland Act 2012.

'More progressive'

Mr Swinney will propose the land and buildings transaction tax - which replaces the existing UK stamp duty land tax paid when buying property over a certain value - and the Scottish landfill tax, both of which are due to come into effect on 1 April next year.

The finance secretary will set out the tax-free threshold below which house buyers will not need to pay any tax, currently £125,000 under the stamp duty system.

The Scottish government said the new system north of the border would be fairer as it would be more directly related to the value of the property.

The Scottish landfill tax, paid by companies and local authorities when they dispose of waste to landfill, will be extended to illegal dumping, which is not currently covered by the UK tax.

The two taxes are expected to bring in between £500m and £600m each year, with Scotland's block grant from the UK Treasury adjusted to reflect the transfer of tax receipts to Holyrood.

Scottish ministers will also have the power to borrow about £300m annually to boost capital investment.

Revenue Scotland

Mr Swinney said: "For the first time in over 300 years aspects of tax and borrowing can begin to be aligned to Scotland's distinct needs and underpin the values of fairness and solidarity.

"These new powers give us the opportunity to reinvigorate the principles set out by Adam Smith - that taxes should be proportionate to the ability to pay, that there must be certainty, convenience, for the taxpayer and efficiency of tax collection.

"We will use new rules on tax avoidance to make sure those that should pay tax do pay tax.

"Our decision to replace the unfair and outdated system of stamp duty with a more progressive tax more closely linked to people's ability to afford the property they want demonstrates the importance of having tax policy for Scotland made in Scotland."

The new body Revenue Scotland will be responsible for collecting and managing the two new taxes.

The Scotland Act 2012 also brought in a Scottish rate of income tax which will take effect from April 2016. Scottish ministers will be able to vary that rate but it will continue to be collected by HMRC.

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