On Wednesday, the chancellor introduced a temporary Stamp Duty Land Tax “holiday” for properties in England and Wales by increasing the threshold to £500,000 in a bid to stimulate the housing market.

The equivalent Scottish tax is Land and Buildings Transaction Tax (LBTT) and following Rishi Sunak's announcement, there was pressure on the Scottish Government to provide an equivalent relief to benefit property purchasers in Scotland.

In response, the Scottish Government increased the nil-rate band for residential property transactions from £145,000 to £250,000.

While the threshold is not as large as that in England, many house purchasers will welcome the change, with no LBTT being payable on purchases up to £250,000. By way of example, purchasing a property at a rate of £250,000 would currently generate a £2,100 tax liability, so it is a considerable saving. The Scottish Government has confirmed this should benefit approximately eight in 10 house buyers in Scotland.

When does this change take place and for how long?

Revenue Scotland has confirmed that this will not be an overnight change with both legislation to be introduced by The Scottish Government and thereafter a policy change by Revenue Scotland. Until the change is introduced, the market could be paralysed, with would-be purchasers seeking to hold off completing their purchase until the change is introduced. Revenue Scotland has however confirmed that the change is to be introduced as soon as possible and will be force until 31st March 2021.

Who does this benefit?

The change benefits purchasers of residential property.

It is worth noting that the amended threshold will not apply to the purchase of second homes and such purchases are also liable for Additional Dwelling Tax (ADS), payable on top of the current LBTT rate. Therefore, those purchasing second homes or buy to let properties (over £40,000) will still be required to pay the flat rate of 4% on the purchase price.

ADS would also apply in a scenario whereby a purchaser is looking to buy a new home before they are able to sell their existing home (although they may be able to reclaim the ADS if the existing property is sold within 18 months).

There is also no change to the LBTT rates for non-residential properties.

Whether the temporary “holiday” is enough for long-term stimulus to the housing market, it remains to be seen, however, for those already looking for their next home, the change is likely to be welcome.