Policy actions  2 of 6

Land and Buildings Transaction Tax

The Land and Buildings Transaction Tax (LBTT) is a tax applied to residential and commercial land and buildings transactions (including commercial purchases and commercial leases) where a chargeable interest is acquired.

LBTT is administered by Revenue Scotland, with support from Registers of Scotland (RoS).

LBTT replaced UK Stamp Duty Land Tax in Scotland on 1 April 2015, following the passage of the Scotland Act 2012 and the subsequent Land and Buildings Transaction Tax (Scotland) Act 2013. This has since been amended through the use of primary and secondary legislation.

Tax is payable at different rates on each portion of the purchase price within specified tax bands.

Residential LBTT

Residential LBTT tax rates and bands for 2019-20 financial year remain unchanged from 2018-19 and are set out in the table below.

Purchase price

LBTT Rate

Up to £145,000

0%

£145,001 to £250,000

2%

£250,001 to £325,000

5%

£325,001 to £750,000

10%

Over £750,000

12%

Non-residential LBTT

The Scottish Budget 2019-20 announced that legislation will be introduced to provide that from 25 January 2019 the lower rate of non-residential LBTT will be reduced from 3% to 1%, the upper rate will be increased from 4.5% to 5%, and the starting threshold of the upper rate will be reduced so that it applies from above £250,000 instead of £350,000. 

Purchase Price

LBTT Rate

Not more than £150,000

0%

£150,001 to £250,000

1%

Over £250,000

5%


The new rates will not apply to transaction where the effective date is on or after 25 January 2019 if contracts have been entered into prior to 12 December 2018

Additional Dwelling Supplement

On 1 April 2016 the LBTT Additional Dwelling Supplement (ADS) came into force, payable on the total purchase price of an additional dwelling of £40,000 or more.

The Scottish Budget 2019-20 announced that legislation will be introduced to provide that from 25 January 2019 ADS will be charged at 4% of the total purchase price of the dwelling. The new rates will not apply to transaction where the effective date is on or after 25 January 2019 if contracts have been entered into prior to 12 December 2018

This supplement forms an important element of the Scottish Government’s drive to protect opportunities for first-time buyers in Scotland, reinforcing the progressive approach in place for LBTT rates and bands. 

Property Investment Funds

The Cabinet Secretary for Finance, Economy and Fair Work announced in the Scottish Budget 2019-20 that the Scottish Government plans to introduce two LBTT reliefs over the course of 2019.  A relief for the ‘seeding’ (initial transfer) of properties into a Property Authorised Investment Fund (PAIF) or Co-owned Authorised Contractual Scheme (CoACS) and a relief for when units in CoACS are exchanged.

Once there is sufficient clarity on the terms of the UK’s withdrawal from the EU becomes clear a consultation on draft legislation and potential impacts will be published.  These reliefs will help safeguard the investment in, and the development of, Scottish real estate and will further increase the attractiveness of Scotland as an investment destination

Detailed information, including worked examples, guidance on reliefs and exemptions, tax calculators based on current rates, and monthly revenues can be found on the Revenue Scotland website.

First-time buyer relief

From 30 June 2018, all first-time buyers in Scotland benefit from relief on LBTT. Alongside measures to increase housing supply, this makes it easier for people in Scotland to buy their first home.

The relief effectively raises the zero tax threshold for first-time buyers from £145,000 to £175,000. This means that around 80% of first-time buyers in Scotland will pay no LBTT at all, while those buying a property for more than £175,000 will receive relief on the portion of the price below the threshold and benefit from savings of up to £600.

We consulted on LBTT first-time buyers relief between February and March 2018, and made The Land and Buildings Transaction Tax (First-Time Buyer Relief) (Scotland) Order 2018 in June 2018.