Revenue Scotland has revised its view on the application of Schedule 13 of the Land and Buildings Transaction Tax (Scotland) Act 2013 (‘LBTTA’) to cases where a charity is one of a number of buyers who are or will become common owners. We now accept that Charities relief from LBTT may be claimed for the charity’s (or charities’) pro indiviso share(s) of the relevant land transaction.
Following the close of the SLfT consultation on waste fines, we have now published an analysis of the responses and the new ‘waste fines’ section of legislative guidance. This new section of guidance will implement the conditions set out by The Scottish Landfill Tax (Qualifying Material) Order 2016, and will come into force from 1 October 2016.
Revenue Scotland has collected £572m in its first full year of operation.
Scotland’s devolved tax authority, which is responsible for the administration and collection of Land and Building Transaction Tax (LBTT) and Scottish Landfill Tax (SLfT), revealed the total revenue raised when it published its 2015-2016 annual report and financial statements today. The revenue collected is transferred to the Scottish Consolidated Fund to support the delivery of public services in Scotland.
Revenue Scotland would like to remind agents of their responsibilities in respect to Arrangements Satisfactory for LBTT. Transactions for residential properties with a chargeable consideration of £40,000 and over will require an LBTT return to be made, even if no tax is due. Full details on which land transactions are notifiable for LBTT purposes and which are not can be found at LBTT4003”
On 4 August 2016, the Bank of England announced a 0.25% decrease in the base interest rate. With effect from 10 August 2016, we have amended our rates accordingly. Please visit our penalties and interest pages for more information.
SLfT guidance on the conditions that must be met before a contribution is deemed as a qualifying contributions for the purposes of the SLCF.
Terminology used in SLfT and information on exemptions
Comparison of Published Statistics with Revenue Scotland’s Annual Report and Financial Statements
The purpose of this appendix is to explain how Revenue Scotland’s monthly LBTT statistics, quarterly SLfT statistics and annual statistics (this publication) relate to the revenue figures that appear in the Devolved Taxes Account in Revenue Scotland’s Annual Report and Financial Statements (referred to in this annex as the ‘Annual Report’), as the figures are produced on a different basis.
Appendix B (i) - comparison of LBTT statistics with published accounts
Whereas the figures in the Annual Report are, by their nature, fixed for a given year (at the point at which the accounts are closed), the published statistics are updated on a monthly basis with changes largely reflecting ADS reclaims (and some other amendments) which have been received after the original LBTT tax returns were submitted.
The Annual Report and published statistics are both based on the date the LBTT return is submitted but with some adjustments made to the Annual Report19 to accrue revenue for LBTT returns (and claims for repayment of ADS) received in April and May (after the end of the financial year) with an effective date (or sale date for the previous main residence) relating to the previous financial year or earlier. These April/May adjustments typically result in relatively small differences between the Annual Report and published statistics, although the difference was more pronounced in the first year of LBTT (2015/16) because there were no “reverse accruals” relating to the previous year.
Differences in reported figures are mainly due to the different treatments of claims for repayment of ADS in the Annual Report and published statistics. This annex focuses on differences arising due to the different treatments of claims for repayment of ADS and is intended to help the reader make meaningful comparisons between the two sources of financial information.
The published statistics allocate claims for repayment of ADS to the period in which the LBTT return (with ADS declared due) was originally submitted. The accounts published in the Annual Report typically allocate claims for repayment of ADS to the accounting year in which the claim for repayment was received. For example, a claim for repayment of ADS received in June 2019 relating to an LBTT return originally received in March 2019 would be allocated to March 2019 (2018/19) in the published statistics and to 2019/20 in the Annual Report. This repayment could not be allocated to 2018/19 in the accounts because the 2018/19 accounts were closed as at 31 May 2019.
Table 16: LBTT excluding ADS and gross ADS declared due and the value of ADS repayments claimed by year the LBTT return/claim for repayment was received and the year the claim relates to
|Year||£ Millions||Devolved Taxes figure for LBTT|
|a) LBTT excluding ADS||b) Gross ADS||
Value of ADS repayments claimed
Year claim relates to
|Net LBTT (a+b+c)|
1. For example, a claim for repayment of ADS received in 2017/18 relating to an LBTT return (with ADS declared due) originally received in 2016/17 would relate to 2016/17 (i.e. the year the LBTT return was received) 2. Revenue Scotland Annual Report and Financial Statements. See: https://www.revenue.scot/about-us/publications/corporate-documents 3. All figures are as at the end of the relevant financial year and have not been revised
Key figures in Table 16 that help illustrate the different treatment of claims for repayment of ADS are the £2.0 million and £19.3 million of claims for repayment of ADS received in 2020/21 relating to LBTT returns initially received in 2018/19 and 2019/20, respectively (and to a lesser extent, the £0.1 million relating to 2017/18). In the published statistics, these claims do not result in any adjustment to the net ADS declared due in 2020/21. However, the net ADS reported in the statistics against 2018/19 and 2019/20 is revised (reduced) to reflect these claims as they relate to ADS originally declared on LBTT returns received in those financial years.
In the Annual Report, these repayments are reported as reductions in revenue in 2020/21 as they were received after the accounting periods for 2018/19 and 2019/20 were closed, and hence the accounts for 2018/19 and 2019/20 are not revised. Therefore, to compare the published statistics for LBTT relating to 2020/21 (as at the 31st March 2021 20) with the LBTT revenue reported in Revenue Scotland’s 2020/21 Annual Report (accounts), the ADS repayment claims received during 2020/21 relating to earlier year (£0.1 million for 2017/18, £2.0 million for 2018/19 and £19.3 million for 2019/20) should be deducted from the statistics21.
Table 16 shows that the ‘Devolved Taxes figure for LBTT’ in Revenue Scotland’s accounts and the ‘Net LBTT’ figure taken from the published statistics (adjusted for ADS reclaims in previous years, as discussed above) can broadly be reconciled. There are some other reasons for differences, but these are generally more minor and it is not practical to adjust the statistics for all possible differences.
The most significant of these is the impact of the accounting ‘accruals process’ which attributes revenue in the first 2 months of the accounting year (April and May) to the previous financial year if the ‘effective date’ of the relevant transaction was before 1 April. For every financial year there is revenue coming in from April and May of the following year (accruals) and revenue subtracted (reverse accruals) from April and May of the year in question which was included in the accounts of the previous year.
The accruals and reverse accruals often roughly cancel out, but for 2015/16, 2019/20 and 2020/21 there were more noticeable difference which in turn resulted in more significant differences between ‘Net LBTT’ and ‘Devolved Taxes figure for LBTT’ in Table 16.
For 2015/16, no LBTT revenue where the tax returns were received in April or May 2015 were accrued into 2014/15 in the annual accounts (as LBTT was only introduced in April 2015), but 2015/16 included some revenue for returns received in April and May 2016 with effective dates before 1 April 2016.
For 2019-20, accruals from April and May 2020 (into 2019/20) were reduced as a result of the impact of the COVID-19 pandemic which significantly impacted LBTT revenue in late March and April/May 2020. This resulted in a lower figure in the accounts (£597.4 million) than in the net figure shown in Table 16 (£604.2 million), a difference of nearly £7 million.
The opposite effect is seen for 2020/21 where the accrual into the accounts (from April/May 2021 into 2020/21) outweighs the accrual from April/May 2020 into 2019/20. In this case the figure in the accounts for 2020/21 (£517.4 million) is around £7 million more than the net figure in Table 16 (£510.9 million).
Appendix B (ii) – comparison of SLfT statistics with published accounts
Table 17: Comparison of SLfT declared due reported in Revenue Scotland statistics with SLfT revenue reported in the Revenue Scotland Annual Report and Financial Statements
|SlfT declared due (in statistics)||SLfT revenue net of repayments, excluding penalties & interest and revenue losses (in accounts)|
1. Revenue Scotland SLfT Official Statistics.
2. Revenue Scotland Annual Report and Financial Statements.
Table 17 compares the SLfT declared due reported in Revenue Scotland Official Statistics with the SLfT revenue figures reported in Revenue Scotland’s Annual Report.
These statistics are reported in relation to the quarter in which the landfill disposal took place. For example, if a landfill operator submits an SLfT tax return in August 2018 relating to the quarter April - June 2018, the tax declared due is reported against that quarter (i.e. April - June 2018). Landfill operators have 12 months from the “relevant date” to amend their tax return and Revenue Scotland SLfT Statistics are revised up to 12 months after the quarter in question. If additional tax is declared, or identified through Revenue Scotland compliance activities, after this 12 month period, the statistics are not revised. This is to minimise the risk of disclosing Protected Taxpayer Information by updating tonnages and revenues by quarter, potentially showing changes relating only to single operators, or very small numbers of operators.
The Annual Report (accounts) reports revenue against the year in which the revenue was realised, with accrual adjustments in April and May. Unlike the statistics, any additional revenue (or reductions in revenue) realised during a financial year (but potentially relating to earlier years) will be reported as revenue in the accounts during that year and may lead to a difference between SLfT reported in the statistics and the accounts.
Date of submission versus effective date
The purpose of this appendix is to explain the basis on which Revenue Scotland’s LBTT statistics are produced, and to demonstrate that data based on the date of submission is similar in value and trend to data on an effective date18 basis, except at the ends of time series and near policy changes.
Revenue Scotland’s monthly LBTT statistics and the data in this publication are based on the date the LBTT return is submitted. Generally this is different from the effective date as taxpayers have 30 days from the effective date to submit their LBTT return. It can take up to eight weeks from the effective date for the majority (99 per cent) of LBTT returns to be submitted, whereas no such time lag exists for data produced by date of submission. Revenue Scotland is aware of interest in data by effective date but there are good reasons to publish statistics by the date the LBTT return is submitted.
- Publishing data based on the date of submission rather than the effective date allows Revenue Scotland to publish monthly LBTT statistics in a timely manner (within approximately 2-3 weeks of the month end).
- The data will be subject to revision only as a result of changes to the LBTT returns submitted (e.g. a claim for repayment of ADS) and not as a result of the submission of LBTT returns relating to an earlier period (which would be the case for statistics produced by effective date).
- Published statistics include actual values rather than estimates for the most recent months.
- Trends observed in the published data will be broadly the same as those on an effective date basis with the largest deviations occurring at the ends of the series and near policy changes.
Figure 30: Proportion of LBTT returns received by the number of weeks between submission and effective date
Figure 30 shows the proportion of LBTT returns received by the number of weeks between the date of submission and the effective date. The first category (<1 week) represents 0 to 6 days (inclusive), the second category (1-2 weeks) represents 7 to 13 days (inclusive), and so on.
Figure 30 shows that 74 per cent of LBTT returns are submitted within one week of the effective date, 97 per cent are received within four weeks of the effective date and 99 per cent are received within six to eight weeks of the effective date. This data is for LBTT returns (excluding reviews of a lease) received between 1 April 2015 and 31 March 2021. This pattern has been very similar from year to year, hence 2020-21 is not shown separately.
If Revenue Scotland was to publish data by effective date, to minimise revisions (due to receipt of LBTT returns relating to property transactions that took place in the specified month), it would seem reasonable that around two months would need to be allowed to pass from the month end before statistics relating to that month could be published. This would ensure that around 99 per cent of LBTT returns with an effective date relating to that month had been received.
For example, Revenue Scotland could be reasonably confident that 99 per cent of LBTT returns with an effective date in March 2021 had been received by 31 May 2021. A small number of LBTT returns with an effective date in March 2021 would be expected to be submitted in June 2021 or later which would result in revisions to the data for March 2021 (if the data was extracted from the tax system and included in a publication by effective date after 31 May 2021).
Figure 31: Number of LBTT returns received by month of submission and effective date
Figure 31 shows the number of LBTT returns (excluding reviews of a lease) received, both by month of submission and by month of effective date. There are some significant differences between the two series for specific months but overall they are similar in terms of value and trend, with no obvious time lag. Where large differences occur, these can in some cases be explained in terms of the introduction of a policy change which relates to specific effective dates.
For example, there are large differences between the two series in March and April 2016. This is likely to have been due to forestalling ahead of the introduction of ADS in April 2016. The number of LBTT returns with an effective date in March 2016 is approximately 2,100 higher than the number of LBTT returns submitted in March 2016, and the number with an effective date in April 2016 is approximately 1,600 lower than the number submitted in April 2016. This reflects the fact that there was a financial incentive for taxpayers to conclude property transactions in March 2016 (before the introduction of ADS). Many transactions were concluded at the very end of that month, with LBTT returns for some of these transactions then being submitted in early April.
In the first month of the series, namely April 2015, the number of returns on an effective date basis is higher than the number of returns based on the date of submission. This reflects the introduction of LBTT in April 2015. There were no LBTT returns submitted in April 2015 with an effective date in March 2015 as these property transactions were subject to UK Stamp Duty Land Tax. However some of the transactions with an effective date in April 2015 will have been submitted the following month, hence reducing the number submitted in April (when compared to those with an effective date in April).
It is worth noting that the Scottish Fiscal Commission (SFC) typically requests data by effective date, which it uses to produce and evaluate forecasts of LBTT revenue. The data provided allows the SFC to more accurately examine the impact of significant events, e.g. policy changes. The data includes LBTT returns with an effective date up to and including the month two months prior to the date on which the data was extracted from the tax system. Revenue Scotland subsequently publishes the data provided to the SFC on the LBTT data requests section of its website.
Scottish Landfill Tax (SLfT) is a tax on the disposal of waste to a landfill in Scotland, whether or not to an authorised landfill site. SLfT applies to all taxable disposals made in Scotland on or after 1 April 2015.
SLfT also applies to the prescribed landfill activities relating to the use of material on site that are listed in the Scottish Landfill Tax (Prescribed Landfill Site Activities) Order 2014.
For more information about SLfT, please see the relevant sections on our website.
The current rates for SLfT are set by the Scottish Government and approved by the Scottish Parliament.
Table 12: Declared taxable disposals by SLfT rate and year
|Year||Declared taxable disposals (tonnes)|
|Standard rate||Lower rate||All|
Standard rate disposals of 1.17 million tonnes were declared in 2020/21, a decrease of 13 per cent on the previous year, and a continuation of the long-term trend of gradually declining disposals.
During April to June 2020, standard rate disposals were 41 per cent lower than the same period of the 2019, significantly faster than the long-term trend of reducing tonnages, due to disruption resulting from the COVID-19 pandemic and restrictions. However, higher disposals in the following three quarters of the year compensated to some extent for this decrease.
Lower rate disposals of 0.62 million tonnes were declared in 2020/21. Since 2015/16 lower rate disposals have decreased by approximately 0.43 million tonnes (41 per cent). Much of this decrease in lower rate disposals occurred between 2015/16 and 2016/17, following the cessation of taxable activity by a small number of operators.
Table 13: SLfT declared due, contributions to the Scottish Landfill Communities Fund (SLCF) and credits claimed by year
|Gross SLfT declared due||Contributions to SLCF||Credit claimed for||Net SLfT declared due|
|Standard rate disposals||Lower rate disposals||All||Contributions to SLCF||Other||All|
1. For 2015/16 and 2016/17 this column will not equal the sum of the previous two columns. This is because of a small number of operators who have not reported the tonnages associated with taxable disposals subject to a partial water discount. The disposals were included in the gross SLfT declared due and, therefore, do not have any tax implications. 2. Taxpayers can claim a credit equal to 90 percent of their contribution to the SLCF. 3. Credit claimed for bad debt and permanent removals
The net SLfT declared due is mainly dependent on standard rate disposals, lower rate disposals and contributions to the SLCF16 . The rates at which standard and lower rate disposals are taxed are set by the Scottish Government and vary each year. For further information on SLfT rates see the guidance published by Revenue Scotland.17
Since 2015/16 the tax rate for standard rate disposals has been around 32 times higher than that for lower rate disposals. Gross SLfT liabilities are therefore dominated by standard rate disposals.
Net SLfT declared due was £106 million in 2020/21, a decrease of £12 million (10 per cent) on the previous year. Similar to standard rate disposal tonnages, the largest decrease in revenue (and contributions to the SLCF) occurred between 2018/19 and 2019/20. The longterm decrease in net SLfT is predominantly due to standard rate disposal tonnages decreasing faster than the standard rate of tax has increased with inflation.
Figure 27: Declared standard rate disposals by quarter
Figure 28: SLfT declared due by quarter
Figure 27 shows declared standard rate disposal tonnages by quarter and year and Figure 28 shows the (net) SLfT declared due by quarter and year. Figure 27 shows that the standard rate disposal tonnages declared in April to June and July to September tend to be slightly higher than in October to December and January to March. April to June 2020 provided an exception to this trend as waste disposals were disrupted by impacts of the COVID-19 pandemic.
Figure 29: Declared taxable disposals by SLfT rate and quarter
Figure 29 shows declared taxable disposals by SLfT rate and quarter. In addition to the seasonality discussed above, Figure 29 shows a gradual downward trend in standard and lower rate disposals up to and including 2018/19-Q2, followed by a more marked decrease in the level of standard rate disposals from 2018/19-Q3 onwards. A clear dip is seen in Q1 2020/21 and this is likely to reflect the impact of COVID restrictions.
Revenue Scotland collects information on the types of waste constituting the taxable disposals in the supplementary spreadsheets submitted with SLfT returns. The waste is categorised using European Waste Catalogue (EWC) codes. For further information on EWC codes see the guidance published by the Scottish Environment Protection Agency.
Table 14: Proportion of gross SLfT declared due by EWC code and year
|EWC code||Description||Estimated proportion of total gross SLfT declared due|
|20 03 01||Mixed municipal||64.7%||62.8%||63.0%||58.6%||46.3%||52.0%|
|19 12 12||Other wastes (including mixtures of materials) from mechanical treatment of wastes other than those mentioned in 19 12 11||22.6%||24.0%||25.2%||28.7%||35.3%||34.2%|
|Other or unknown||12.7%||13.2%||11.8%||12.7%||18.4%||13.8%|
Mixed municipal waste (EWC code 20 03 01) is consistently the most prevalent waste type, contributing around 63 per cent of SLfT revenue from 2015/16 to 2017/18, falling to around 49 per cent in 2019/20 to 2020/21. A further 23 to 35 per cent of the gross SLfT due is attributable to disposals of EWC code 19 12 12 – other wastes (including mixtures of materials) from mechanical treatment of wastes other than those mentioned in 19 12 11. Disposals of these two waste streams have accounted for the majority (82 to 88 per cent) of gross SLfT declared due each year.
Note that as EWC code 19 12 12 constitutes waste “from the mechanical treatment of waste” then it will contain other waste types (i.e. other EWC codes) that have then been mechanically treated.
Table 15: Taxable disposals by EWC code and SLfT rate, 2015/16 – 2020/21
|EWC code||Description||Row percentage||Taxable disposals (tonnes)|
|Standard rate||Lower rate|
|20 03 01||mixed municipal waste||100.0%||0.0%||5,921,400|
|19 12 12||other wastes (including mixtures of materials) from mechanical treatment of wastes other than those mentioned in 19 12 11||69.4%||30.6%||3,708,700|
|Other or Unknown||24.4%||75.6%||4,650,900|
Mixed municipal waste (EWC code 20 03 01) has accounted for 5.9 million tonnes of taxable disposals over the first six years of SLfT, all of which was declared as subject to the standard rate of SLfT. EWC code 19 12 12 has accounted for 3.7 million tonnes over six years. Taxable disposals of EWC code 19 12 12 are split between the standard and lower rates of SLfT. Table 15 shows that 69 per cent of disposals of EWC code 19 12 12 where tax was declared due have been declared as subject to the standard rate of SLfT and the remaining 31 per cent have been declared as subject to the lower rate.
Further information on determining the amount of SLfT tax payable (e.g. higher or lower rate) is contained in guidance published by Revenue Scotland.