Proposals to introduce Building Safety tax in Scotland

The Scottish Government is seeking views on the introduction of a tax on new residential developments, to be paid by housebuilders.

Following England's lead, the new tax – the Building Safety Levy – would take the form of an additional charge to support the Scottish Government's work to remediate cladding in existing residential buildings.

In England, the UK Government intends to raise the majority of the funding for its work to remediate these buildings through a Building Safety Levy, paid for by developers in the residential property development sector. The UK Government’s decision to create this Levy in England-only means that Scotland will receive no consequential funding from its introduction. "This creates a gap in our funding arrangements, and the need to address this gap must be considered in the context of an incredibly challenging medium-term outlook for public finances," it said.

A consultation for the Scotland Building Levy opened last month and runs until 18 November 2024. It centres around the principles of introducing a Levy on new housebuilding, to support cladding remediation work. It is seeking views, both positive and negative – to understand the impact the Levy could have. It asks who should pay, and who should be exempt; how the Levy should be calculated; how the Levy should operate – when will it be charged, and how will it be collected.

It also asks questions around compliance – what kind of powers might be needed to enforce the Levy; how long the Levy should run for; and how housebuilders and the wider housing supply chain might be affected by the introduction of the Levy.

"Responses to this consultation and the associated programme of engagement will support the policy development for a potential future Building Safety Levy in Scotland," the Scottish Government said in a press release. "If the powers to allow Scottish Ministers to introduce a building safety levy are devolved to the Scottish Parliament, then responses will also support development of a future Bill that provides for a devolved tax."

A Partial Business and Regulatory Impact Assessment (BRIA) has also been published, which provides the government's initial view of the costs, benefits and risks that the Scottish Building Safety Levy may have if introduced.

The consultation paper contains full background information for this consultation which may be useful to read or refer to when responding.