Land and Buildings Transaction Tax
The Land and Buildings Transaction Tax (LBTT) is a tax applied to residential and non-residential land and buildings transactions (including commercial leases).
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.
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.
Change to starting threshold for residential property transactions
The Cabinet Secretary for Finance, Kate Forbes MSP, announced in her statement to Parliament on Thursday 9 July that the starting threshold for LBTT for residential property transactions will be raised from £145,000 to £250,000.
The change will not come into force immediately however we are working with Revenue Scotland and others to ensure the change can be introduced as quickly as possible. Once introduced, the change will remain in force until 31 March 2021.
This will mean that residential property transactions where the purchase price is under £250,000, and to which the Additional Dwelling Supplement (ADS) does not apply, will attract no LBTT. For transactions where the purchase price is above £250,000, the rates and thresholds that usually apply remain unchanged.
Where the ADS does apply, the change to the starting threshold will also apply to such transactions. This means that a residential property transaction that is liable to the ADS will not pay the standard rates of LBTT on the first £250,000 of the purchase, however the ADS will remain payable at 4% of the total purchase price.
We will update this page as and when further information becomes available.
Residential LBTT tax rates and bands for the 2020 to 2021 financial year remain unchanged from 2019 to 2020 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%|
Non-residential LBTT tax rates and bands for the 2020 to 2021 financial year for conveyances remain unchanged from 2019 to 2020 and are set out in the table below.
|Purchase price||LBTT rate|
|Not more than £150,000||0%|
|£150,001 to £250,000||1%|
The Scottish Budget 2020-2021, published on 6 February 2020, introduced changes to the LBTT tax rates and bands for non-residential leases.
A new rate of 2% is payable where the net present value (NPV) of the rent payable under the lease is above £2 million. The revised tax rates and bands are set out in the table below.
|NPV of rent payable||Rate of tax|
|Up to £150,000||0%|
|£150,001 to £2 million||1%|
|Above £2 million||2%|
The new tax rates and bands apply to transactions where the effective date of the transaction is on or after 7 February 2020.
However, the revised rates and bands do not apply to transactions where the effective date is on or after 7 February 2020 if the contracts for the land transaction have been entered into prior to 6 February 2020.
In addition, the change to the tax rates in bands will not apply to any further returns made in connection with the three year review, assignation or termination of a lease where the effective date is between 1 April 2015 and 6 February 2020. More detailed guidance on this is provided by Revenue Scotland.
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 ADS is charged at 4% of the total purchase price of the dwelling.
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
At the Scottish Budget 2019 to 2020, we undertook to introduce two targeted LBTT reliefs following further consultation, to help safeguard investment in Scottish real estate and increase the attractiveness of Scotland as an investment destination.
These were: 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.
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.
Legislation to provide for these two reliefs was not brought forward in 2019 due to continued uncertainty around the terms of the UK’s withdrawal from the European Union. We now plan to publish a consultation on draft legislation in 2020.
First-time buyer relief
Since 30 June 2018, first-time buyers in Scotland have benefited from a 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.