We have introduced guidance for our new tax relief on Green Freeports which come into effect on 1 October 2023.
The guidance includes the overview of the tax relief, key terms, how to claim the relief and also how to withdraw the relief.
In his Programme for Government statement on 5 September, the First Minister Humza Yousaf, announced that the Scottish Government is pursuing the devolution of powers to introduce an Building Safety Levy in Scotland.
The levy will be payable by those operating in the residential property development sector. The exact scope and structure of the levy in Scotland will be designed by the Scottish Government in due course.
The Scottish Landfill Tax (Standard Rate and Lower Rate) Order 2023 has now been approved by the Scottish Parliament and came into effect on 1 April 2023. As a result, taxable disposals made or treated as made on or after 1 April 2023 will be subject to the following rates of SLfT:
Revenue Scotland has decided to remove the 12 month authority to act time limit to allow us to provide a more efficient service to our taxpayers and agents.
From 19 March 2023, the 12 month authority to act limit for all future tax returns received will no longer be applicable. Agents will retain authorisation status unless we are notified by either the taxpayer or the agent.
Conveyance tax returns submitted prior to 19 March 2023
Following a recent review of Land and Buildings Transaction Tax - Additional Dwelling Supplement, The Scottish Government have published proposed legislative changes in a consultation and are inviting responses from all interested parties.
Councils would no longer pay a tax on additional properties when supported by the Scottish Government to buy properties for affordable housing stock, under proposals in a new consultation.
All data were extracted as at 31 May 2022 but, in keeping with Revenue Scotland’s revisions policy, some of the data relating to earlier years has not been updated. For LBTT and SLfT, only data for 2020/21 onwards has been updated (and for sub-Scotland geographies, only the most recent year was updated).
Reliefs
There are various data quality issues with reliefs information collected from LBTT returns in previous years, although these issues do not affect the total LBTT declared due.
The most common data quality issue affecting total revenue foregone to reliefs is that, prior to the introduction of a new electronic tax system in July 2019, 4% of taxpayers claiming reliefs incorrectly entered the value of the relief claimed as the full consideration - e.g. the total price of the property – rather than the LBTT amount that would be due without reliefs. This means that simply summing the value of reliefs claimed on tax returns would overstate the value of LBTT revenue forgone to reliefs. The LBTT revenue forgone to reliefs needs to be estimated from other information provided by the taxpayer, and hence the results presented are referred to as estimates. Full details of the methods used to produce the estimates can be found on the LBTT data requests section[1] of the Revenue Scotland website.
From 2015/16 to 2018/19, the relief amount was estimated in this way for 10% of returns claiming a relief. Recent improvements to the tax system have reduced the need to estimate the relief amount, and in 2020/21, the relief amount was estimated for 1% of returns.
It is also worth noting that the estimates are likely to underestimate ADS (and consequently LBTT) revenue forgone to reliefs to some extent. ADS is due on most purchases of a residential property by a non-natural person, such as a company. When a full relief is claimed reducing the LBTT liability to nil, in some cases the ADS has not been declared (rather than declared and reduced to nil by relief). Therefore, although the tax position is correct, it is likely that data on reliefs for residential transactions will underestimate ADS revenues forgone. There is a similar issue where a non-residential transaction contains a mixture of residential and commercial elements (‘mixed’ property transactions are treated as non-residential transactions for LBTT). Again, the overall tax position for the relevant transactions remains correct.
Notes on LBTT returns
The LBTT legislation prescribes that an LBTT return must be submitted and arrangements made for payment of the LBTT due to Revenue Scotland before the Keeper of the Registers of Scotland can proceed with registration of title. The LBTT return includes a range of information about the transaction, tax liabilities and reliefs claimed. Amendments and corrections can be made to LBTT returns up to one year following the filing date. This may lead to revisions to the LBTT data in this publication. The vast majority of LBTT returns are submitted online via the Revenue Scotland website by agents acting on behalf of taxpayers.
Notes on SLfT returns
The SLfT data presented in this publication comes from SLfT returns and is based on the period the return relates to. A SLfT return must be submitted and arrangements made for payment of the SLfT due to Revenue Scotland by 44 days after the end of the quarter. The SLfT return includes a range of information about the tax liabilities and credits claimed, along with supplementary information on the type and amount of waste disposed of in the quarter. Amendments and corrections can be made to SLfT returns up to one year following the filing date. This may lead to revisions to the SLfT data in this publication. The vast majority of SLfT returns are submitted online via the Revenue Scotland portal.
Other Data Sources
Users should note that this publication is not a commentary on the volume of waste from all
sources or volume of waste landfilled in Scotland. Nor is it a commentary on the volume or value of land and property transactions in Scotland.
The Scottish Environment Protection Agency publishes comprehensive waste data for Scotland on its website.
Registers of Scotland publishes comprehensive property data for Scotland on its website.
[1] The relevant file is dated 11 October 2018 and named ‘LBTT – reliefs.xlsx’.
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). The figures in the statistics and Annual Report 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 Report4 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.
4The Annual Report and Financial Statements are produced to comply with the accounting principles and disclosure requirements of the Government Financial Reporting Manual.
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 |
|
£ millions3 |
Devolved Taxes figure for LBTT2 |
|||||||||
|
a) LBTT |
b) Gross ADS |
|
Value of ADS repayments claimed |
Net LBTT |
||||||||
|
|
Year claim relates to1 |
|||||||||||
|
2016/17 |
2017/18 |
2018/19 |
2019/20 |
2020/21 |
2021/22 |
c) All |
||||||
|
2015/16 |
415.8 |
|
415.8 |
424.9 |
||||||||
|
2016/17 |
389.7 |
104.5 |
13.3 |
|
13.3 |
480.9 |
483.6 |
|||||
|
2017/18 |
461.5 |
124.3 |
12.3 |
17.1 |
|
29.4 |
556.4 |
557.3 |
||||
|
2018/19 |
457.1 |
130.4 |
1.6 |
13.0 |
18.6 |
|
33.1 |
554.4 |
554.2 |
|||
|
2019/20 |
478.5 |
166.4 |
0.0 |
1.6 |
15.2 |
23.9 |
|
40.7 |
604.2 |
597.4 |
||
|
2020/21 |
398.8 |
156.6 |
0.0 |
0.1 |
2.0 |
19.3 |
23.1 |
|
44.5 |
510.9 |
517.4 |
|
|
2021/22 |
666.6 |
192.5 |
0.0 |
0.0 |
0.7 |
4.6 |
20.0 |
27.0 |
52.2 |
807.0 |
807.2 |
|
Notes: 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 £4.6 million and £20 million of claims for repayment of ADS received in 2021/22 relating to LBTT returns initially received in 2019/20 and 2020/21, respectively (and to a lesser extent, the £0.7 million relating to 2018/19). In the published statistics, these claims do not result in any adjustment to the net ADS declared due in 2021/22. However, the net ADS reported in the statistics against 2019/20 and 2020/21 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 2021/22 as they were received after the accounting periods for 2019/20 and 2020/21 were closed, and hence the accounts for 2019/20 and 2020/21 are not revised. Therefore, to compare the published statistics for LBTT relating to 2021/22 (as at the 31st March 20225) with the LBTT revenue reported in Revenue Scotland’s 2021/22 Annual Report (accounts), the ADS repayment claims received during 2021/22 relating to earlier years (£0.7 million for 2018/19, £4.6 million for 2019/20 and £20 million for 2020/21) should be deducted from the statistics6.
Notes:
5.See LBTT, March 2022 https://www.revenue.scot/about-us/publications/statistics/datasets
6. Note – the figures of £0.7 million, £4.6 million and £20 million for 2018/19, 2019/20 and 2020/21 can be estimated from the statistics by differencing the net ADS statistics published for March 2022 with the net ADS statistics published for March 2021.
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 two 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
|
Year |
£ millions |
|
|
SLfT declared due |
SLfT revenue net of repayments, excluding penalties & interest and revenue losses |
|
|
2015/16 |
149.3 |
147.0 |
|
2016/17 |
148.0 |
149.1 |
|
2017/18 |
146.6 |
148.0 |
|
2018/19 |
141.3 |
148.5 |
|
2019/20 |
118.6 |
119.0 |
|
2020/21 |
106.3 |
106.5 |
|
2021/22 |
125.2 |
125.2 |
Notes: 1. Revenue Scotland SLfT Official Statistics.
See https://www.revenue.scot/about-us/publications/statistics/scottish-landfill-tax-statistics
2. Revenue Scotland Annual Report and Financial Statements.
See https://www.revenue.scot/about-us/publications/corporate-documents
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.
Revenue Scotland’s monthly LBTT statistics and the data in this publication are based on the date the LBTT return is submitted to Revenue Scotland. Generally this is different from the effective date (generally the data that a land transaction is completed) 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%) 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 submission date.
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 to an authorised landfill site or not. SLfT applies to all taxable disposals made in Scotland on or after 1 April 2015.
Table 12: Declared taxable disposals by SLfT rate and year
| Declared taxable disposals (tonnes) | |||
| Year | Standard rate | Lower rate | All |
|
2017/18 |
1,775,100 |
790,200 |
2,565,300 |
|
2018/19 |
1,650,100 |
739,500 |
2,389,600 |
|
2019/20 |
1,343,600 |
685,700 |
2,029,400 |
|
2020/21 |
1,170,200 |
618,800 |
1,789,100 |
|
2021/22 |
1,348,600 |
680,100 |
2,028,700 |
Standard rate disposals of 1.35 million tonnes were declared in 2021/22, an increase of 15% on the previous year. Lower rate disposals also increased by 10%. This marks a departure from the long term trend of decreasing tonnage year on year, due in part to facilities returning to normal disposal activities after the previous year was affected by the COVID-19 pandemic.
Table 13: SLfT declared due, contributions to the Scottish Landfill Communities Fund (SLCF) and credits claimed by year
| Year | £Millions | |||||||
| Gross SLfT due | Contributions to SLCF | Credit claimed for | Net SLfT declared due | |||||
| Standard rate disposals | Lower rate disposals | All | Contributions to SLCF | Other | All | |||
| 2017/18 | 152.8 | 2.1 | 155.0 | 9.0 | 8.1 | 0.3 | 8.4 | 146.6 |
| 2018/19 | 146.8 | 2.1 | 148.9 | 8.0 | 7.2 | 0.4 | 7.6 | 141.3 |
| 2019/20 | 122.7 | 2.0 | 124.7 | 6.3 | 5.7 | 0.5 | 6.2 | 118.6 |
| 2020/21 | 110.2 | 1.9 | 112.0 | 5.2 | 4.9 | 0.9 | 5.8 | 106.3 |
| 2021/22 | 130.4 | 2.1 | 132.5 | 6.3 | 5.7 | 1.7 | 7.4 | 125.2 |
1.Taxpayers can claim a credit equal to 90 percent of their contribution to the SLCF
2. Credit claimed for bad debt and permanent removals
Net SLfT declared due was £125 million in 2021/22, an 18% increase on the previous year. The long-term decrease in net SLfT before 2021/22 is mainly due to standard rate disposal tonnages decreasing faster than the standard rate of tax has increased.
Standard rate disposals account for the vast majority of SLfT due. Though typically the tonnages are only about twice as high as lower rate disposals, the tax rate is around 32 times higher.
Net SLfT declared due is mainly dependent on standard rate disposals, lower rate disposals and contributions to the Scottish Landfill Communities Fund (SLCF). The SLCF is a tax credit scheme for SLfT which allows landfill site operators to contribute tax credits to benefit community and environmental projects.
Figure 20: Declared standard rate disposals by quarter
Standard rate disposal tonnages were highest in Q1 and Q2 each year up until 2020/21. In Q1 of 2020/21, the effect of the first COVID-19 lockdown can be seen in a greatly reduced tonnage declared. In 2021/22, the tonnages declared were fairly evenly spread in the first 3 quarters of the financial year. Year on year there had been a gradual decrease in total tonnage (standard plus lower rate) until 2021/22, which has increased slightly, close to 2019/20 levels.
Table 14: Proportion of gross SLfT declared due by EWC code and year
| EWC Code | Description | Estimated proportion of total gross SLfT declared due | ||||
| 2017/18 | 2018/19 | 2019/20 | 2020/21 | 2021/22 | ||
| 20 03 01 | Mixed municipal waste | 63.0% | 58.6% | 46.3% | 52.0% | 46.1% |
| 19 12 12 | Other wastes (including mixtures of materials) from mechanical treatment of wastes other than those mentioned in 19 12 11 | 25.2% | 28.7% | 35.3% | 34.2% | 39.5% |
| Other or unknown | 11.8% | 12.7% | 18.4% | 13.8% | 14.4% | |
European Waste Catalogue (EWC) codes are a coding system used to describe and categorise waste. Mixed municipal waste the most prevalent waste type, contributing around 46% of SLfT revenue in 2021/22. A further 40% was attributable to disposals of EWC code 19 12 12 – other wastes. Disposals of these two waste streams have accounted for the majority of gross SLfT declared due each year.
Note that as EWC code 19 12 12 constitutes waste “from the mechanical treatment of waste” it will contain other waste types (other EWC codes) that have then been mechanically treated.
Table 15: Taxable disposals by EWC code and SLfT rate, 2015/16 – 2021/22
| EWC code | Description | Row percentages | Tax disposals (tonnes) | |
| Standard rate | Lower rate | |||
| 20 03 01 | Mixed municipal waste | 100% | 0.0% | 6,716,300 |
| 19 12 12 | Other wastes (including mixtures of materials) from mechanical treatment of wastes other than those mentioned in 19 12 11 | 69.1% | 30.9% | 4,290,100 |
| Other or unknown | 25% | 75.0% | 5,303,300 | |
Mixed municipal waste has accounted for 6.7 million tonnes of taxable disposals since 2015/16, all of which was subject to the standard rate of SLfT. EWC code 19 12 12 has accounted for 4.3 million tonnes over the same time span. 69% of EWC code 19 12 12 disposals were subject to standard rate tax and 31% were subject to the lower rate.