Grant Thornton has called for wide ranging reforms, including greater tax simplification, to boost growth in Scotland’s fragile property and construction sector.
The leading business and financial adviser has welcomed recent action by the Scottish Government designed to boost the sector, including simplified planning zones. But, it’s warning the industry continues to face an uncertain future if a number of challenges aren’t addressed.
Recent reforms include the introduction of the Land and Buildings Transactions Tax (LBTT), which replaced Stamp Duty Land Tax (SDLT). A year after its introduction, the tax has raised more than £416m, highlighting the crucial role property development now plays in Scotland’s economy. But many firms, who are already facing a number of challenges in the current uncertain market, are warning that action isn’t being taken quickly enough to address LBTT’s teething troubles. Concerns including a lack of seeding relief and issues with sub-sale development relief.
The Buy-to-Let market has also been affected by reforms. Changes include the removal of tax deductions for mortgage interest, higher rates of LBTT due to the additional supplement and higher rates of capital gains tax when selling properties.
Chris Smith, Tax Manager at Grant Thornton, said:
“The Scottish Government deserves a lot of credit for recognising many of the issues stymying growth in the property and construction sector. Many recent reforms have provided a shot in the arm for the industry and encouraged growth particularly for first time buyers. But, this is only the first step in what must be a prolonged effort to tackle chronic issues that risk creating long term damage.
“The industry has been calling for action to address red tape and bureaucracy for many years and the devolution of more tax powers to Edinburgh provides a golden opportunity for Scotland to try a completely new approach.
“The key to success will be ensuring that the reforms don’t simply add greater bureaucracy, but instead create a more transparent, simplified structure that is focused on growth and long term sustainability.”