Property taxes in Scotland raised £686.5m in the last year according to analysis of the latest statistics by a leading property firm. DJ Alexander Ltd.

This means that Scottish Government revenues from Land and Buildings Transaction Tax (LBTT – Scotland’s equivalent of stamp duty) increased by 17.6% over the previous 12 months.

This is £102.8m higher than the previous period between March 2023 and February 2024 when £583.7m was raised. Five months of the last twelve had the highest ever monthly figures for LBTT with July 2024 recording £71.2m alone.

Of the £686.5m taxes raised £205.6m is from the additional dwelling supplement (ADS) which is charged on second homes and properties purchased by landlords and property investors to rent. This is 29.9% of the total raised and is £43.8m higher than the previous 12-month period.

Almost all the residential taxes raised arose from properties sold for more than £325,001. The 18,700 transactions above this threshold collected £399.6m which is 83.1% of the total £480.9m raised in LBTT.

David Alexander, the chief executive officer of DJ Alexander Scotland, comments: “Scottish homebuyers are now contributing over £13m a week to the Scottish Government through property taxes. The LBTT income from the last 12 months equates to £13.2m every seven days with the bulk of this tax falling on people buying properties valued at over £325,001 which is where the 10% rate begins in Scotland.”

“The usual explanation is that those with the broadest shoulders should pay the greatest amount but clearly these taxes are targeting many Scots who would not regard themselves as rich. Yet those earning an annual income of just under £29,000 and living in a property worth just over £325,000 are defined as the Scots with the broadest shoulders. Given that the average income in Scotland is £38,000 this means that it is ordinary people who are regarded as appropriate targets for higher taxation.

“It is highly unlikely that these people will believe they are wealthy. This is the income of plumbers, chefs, sales managers, senior drivers, and administrators. An even higher tax band impacts upon nurses, teachers, and police officers. The danger is that these additional taxes will simply be swallowed up by growing general expenditure with taxpayers unable to see why they are being asked to pay more in Scotland. I think most homebuyers would prefer to see these taxes targeted at addressing the housing emergency.

“Yet these figures are also a sign of just how resilient and lively the Scottish property market is. It is positively booming with prices rising at a higher rate than normal. These taxes do not – as yet – seem to be deterring homebuyers. Of course, this may not always be the case, and the long-term outlook might not be as positive but in the short term the Scottish property market remains very lively.”

Alexander concludes: “Property taxes – whether it is LBTT in Scotland or Stamp Duty Land Tax (SDLT) in England – will never be popular but remain a big earner for governments. There is surely a legitimate argument to be made for a level playing field between Scotland and the rest of the country. It is uncertain what the long-term impact on the Scottish economy of such higher taxes on homes and employment will be, but it is unlikely to be positive in the long term. If higher property and income taxes start to deter individuals and companies from future investments in Scotland, then far from being progressive taxation it will be regressive. However, until that point though this remains a substantial revenue earner for the Scottish Government.”