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Land and Buildings Transaction Tax (Group Relief and Sub-sale Development Relief Modifications) (Scotland) Order 2025 [Draft]
The next agenda item is an evidence session with the Minister for Public Finance on the draft Land and Buildings Transaction Tax (Group Relief and Sub-sale Development Relief Modifications) (Scotland) Order 2025. The minister is joined by the Scottish Government official Laura Parker, LBTT policy lead in the directorate for tax and revenues. I welcome our witnesses and I invite the minister to make a short opening statement.
Good afternoon, convener and committee. The draft order provides for amendments to schedules 10 and 10A to the Land and Buildings Transaction Tax (Scotland) Act 2013.
Schedule 10 is amended to ensure that group relief is available in instances of non-partition demergers. The effect is that group relief will be available in company reconstructions where ultimate ownership of relevant land or property has not changed.
Schedule 10A is amended to clarify the point at which the relevant five-year development period commences in respect of sub-sale development relief. That is important, as relief may be withdrawn where significant development does not take place within that period. The amendment provides clarity for relevant stakeholders, making it clear that the relevant period commences from the effective date of the sub-sale transaction.
The Scottish Fiscal Commission considered the financial impact of those amendments in its December 2024 forecasts and deemed them to have an “immaterial” and “negligible” impact, respectively. The draft order was developed following engagement with stakeholders as part of the Aggregates Tax and Devolved Taxes Administration (Scotland) Bill process. Members will recall that the amendments were considered by the committee at stage 2 of the bill process. Although the amendments were deemed out of scope at stage 3, the Scottish Government nevertheless recognises the need for the changes to be made.
I welcome the contributions from stakeholders in developing the contents of the draft order, and I look forward to taking questions.
Thank you for that statement. I do not have any questions, so I will open up the discussion to members of the committee. At the moment, the only member who wants to ask a question is Ross Greer.
Good afternoon, minister. My question is not on the specific issue; it is about the wider approach to dealing with anomalies in the additional dwelling supplement and LBTT. Is the way that we have been going about that not a bit fragmented? I recognise what you say about amendments being out of scope for bills. However, we have had the ADS review work by your predecessor, Tom Arthur, which dealt with some anomalies, and there is wider LBTT review work under way, so it feels as though we are dealing with this piecemeal. We could have recognised a few years ago that there are a variety of anomalies that everybody agrees need to be resolved, and we could have taken a more holistic approach to addressing all of those across LBTT and ADS.
Over the time for which the ADS measures have been in place, a number of issues have arisen that were not foreseen when we brought in the legislation. Changes had to be made because of specific complicated circumstances that occurred, which gave rise to a need for clarity or changes in the provisions.
With the specific measures that we are considering today, we have not had any examples of people saying that there has been a problem with the transactions that they are seeking to take forward or have taken forward, but there has been a call from stakeholders that we clarify the law, just to be absolutely sure that investors and others are clear on it.
This is very much a tidying-up exercise, which obviously happens with all legislation. I do not know whether we would have taken a different approach. Clearly, if other examples were to arise whereby stakeholders felt that there was a need for clarification or a tidying-up of technical points, as can happen with any legislation, we would seek to respond to those.
I accept all of that. My question arises out of a frustration about some issues—to be fair, they are more about ADS than about LBTT. Some are related to catching people who are in the process of family separation or divorce. I have also written to you about disabled people and someone else purchasing a home on their behalf, and we have talked about that. Those issues have been around for a while. The review was a good few years ago—maybe four years ago. It feels as though we are dealing with the issues in a fragmented manner, rather than taking a holistic approach in which we look at all the anomalies across the system, collectively agree that nobody ever intended those to be the case, and then set out how we will address them.
I have had correspondence from people who have been caught by various anomalies and who find it hard to get an understanding of the Government’s approach to dealing with those. I have heard from people who feel that the anomaly they were caught by is something that the Government indicated a few years ago that it was going to address but that that has still not happened. They find it hard—as do I—even to get an understanding of a timeline from the Government about how it is addressing all those issues.
Is that in regard to outstanding issues that have not been resolved yet?
Yes—some of them.
I am happy for you to write to me, and we will respond with regard to the timeline for resolution. Clearly, the review that is coming on LBTT will catch those and other issues—it is intended to sweep those up. I understand the point that you are making, and I commit to giving more certainty on the timescales for resolution of those issues.
Thank you.
As members have no further questions, we turn to agenda item 4, which is formal consideration of the motion on the instrument.
Motion moved,
That the Finance and Public Administration Committee recommends that the Land and Buildings Transaction Tax (Group Relief and Sub-sale Development Relief Modifications) (Scotland) Order 2025 [draft] be approved.—[Ivan McKee]
Motion agreed to.
I thank the minister and Ms Parker for attending to give evidence. We will publish a short report to the Parliament setting out our decision on the instrument.
As that was the last item on the public agenda, I now close this meeting.
Meeting closed at 12:27.