Property taxes in Scotland raised £714.2m over the past 12 months, according to analysis of the latest statistics by DJ Alexander Ltd.
The review of the data by Scotland’s largest lettings and estate agency shows that Scottish government revenues from Land and Buildings Transaction Tax (LBTT) increased by 18.2% over the previous period from August 2023 to July 2024.
The total residential taxes collected for July 2025 alone were the highest ever, at £80.3m, with a record £52.3m from homebuyers and £28.0m from the additional dwelling supplement (ADS) which is paid by second homeowners and property investors.
This is £110.0m higher than the £604.2m raised in the period between August 2023 and July 2024. Of the latest £714.2m tax figure, £221.3m was from the ADS, equating to 30.9% of the total raised, and is £59.5m higher than the previous 12-month period.
Almost all the residential taxes raised arose from properties sold for more than £325,001. The 19,560 transactions above this threshold collected £388.8m, or 78.9% of the total £493.0m raised in LBTT (this is the figure for residential sales with the ADS figures removed). This means that the average tax levied per transaction was £19,877.
David Alexander, the chief executive officer of DJ Alexander Scotland, commented: “The tax take from Scottish homebuyers continues to reach higher and higher levels with a record £80.3m in one month. To put this into perspective, this is £12.2m higher than the figure for June.
“That almost a third of this – a total of £221.3m – comes from landlords and second home buyers indicates just how crucial this group is in maintaining high levels of taxable income for the Scottish government. Despite increasing taxation on this group from 6% to 8% last year, there still seems to be an appetite to buy. The increase in the level of taxation by 2% can only partially explain a tax take which has gone up by £59.5m in one year.”
Alexander continued: “But it must be questionable whether this is a sustainable, or even sensible, means of raising revenue. This policy was criticised earlier this year in a report by the Institute for Fiscal Studies (IFS) called ‘Assessing Scottish tax strategy and policy’ which stated that ‘Scotland’s increase in the surcharge in land and buildings transaction tax (LBTT) on the purchase of second and rental homes, from 6% to 8%…continued a trend of increases in this additional dwelling supplement’, and ‘the move makes an already highly economically damaging tax even worse.’ It continued: ‘it is not yet clear what the Scottish government’s vision for tax policy is – but increases to LBTT are not consistent with any economically sensible strategy’.”
“The IFS, and many private investors, understands that the current LBTT policy is simply political posturing which makes little or no economic sense but plays up to the idea that punishing ‘the rich’ is the way forward. The fact that those defined as being rich is anyone buying a property valued at over £325,000 highlights the factual emptiness of this policy and does little to address the current housing issues in Scotland.”
Alexander added: “As the IFS report explains: The change will encourage owner-occupation but will make it even more difficult and expensive for those who remain in the rental sector – tenants (who are likely to face higher rents as a result of the policy) as well as landlords. And the policy does not just penalise the rental sector; it penalises transactions within the rental sector. Preventing a landlord who wants to sell their property to another landlord from doing so is bad for both landlords and tenants.
“Yet these figures are also a sign of just how resilient and lively the Scottish property market remains. Indeed, the large amounts of tax which are paid by property investors is testament to their continued faith in the Scottish market. These taxes also do not seem to be deterring homebuyers.
“But we need a level playing field with our UK counterparts and we need – as the IFS and others have frequently pointed out – a proper tax strategy in which there is a reasonable explanation of why these taxes are so high and what wider benefits accrue for society and for economic growth. There must be another option of raising taxes in which one part of the economy – homebuying and property investment – doesn’t simply function as a cash cow to be taxed when required.”
Alexander concluded: “There can be little doubt that economies where there are higher property and income taxes eventually start to deter individuals and companies from investing in the future. Such policies then shift from being thought of as progressive taxation and instead act as a barrier and disincentive to growth.”
Read the orginal article: https://propertyindustryeye.com/last-12-months-a-record-high-for-property-taxes-in-scotland/
