Location is everything

Now that Wales and Scotland have devolved powers for taxation purposes, residents that live and work in the border areas with England have more planning options.

Wales have their own stamp duty regime from April 2018, the Land Transaction Tax (LTT), and Scotland, from April 2015, the Land & Building Transaction Tax (LBTT). Scotland have devolved powers to set their own rates of Income Tax.

Regarding property purchases, this can create interesting differences for individuals buying in the border areas of Wales/England and Scotland/England. For example:

Consider Llanymynech, a village that straddles the border between Powys (Wales) and Shropshire (England). The amount of stamp duty payable on an identically priced house, say £179,000, would cost the buyer £1,080 in Stamp Duty Land Tax if bought in the English side of the village, but no Land Transaction Tax would be payable for an equivalently priced house on the Welsh side of the village. A definite incentive to buy in this price bracket the Welsh side of the border.

If you live in the Scotland/England border areas and you are contemplating the purchase of an expensive property and your budget is £1m, you may want to consider the following numbers:

  • Buying in Scotland would cost you £78,350 in Land & Building Transaction Tax, and
  • Buying in England would cost you a mere £43,750 in Stamp Duty Land Tax.

Scotland has also set its own Income Tax rates for 2018-19. So, depending on the amount of your income, you may pay variable rates of Income Tax depending on which side of the border you choose to live.

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