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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.

Residential LBTT

The Cabinet Secretary for Finance, Kate Forbes MSP, announced on Thursday 9 July that the starting threshold for LBTT for residential property transactions will be raised from £145,000 to £250,000.  The revised rates and bands, as set out in the table below, apply to all relevant transactions where the effective date is between 15 July 2020 and 31 March 2021 (inclusive of these dates).

Purchase price LBTT rate
Up to £250,000 0%
£250,001 to £325,000 5%
£325,001 to £750,000 10%
Over £750,000 12%

Where the Additional Dwelling Supplement (ADS) applies, 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 residential rates of LBTT on the first £250,000 of the purchase price, however the ADS will remain payable at 4% of the total purchase price.

More information including guidance and tax calculators is available on the Revenue Scotland website.

For transactions where the effective date is outside of the period of 15 July 2020 to 31 March 2021, the previous rates and bands, as set out in the table below, will continue to apply.

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

Conveyances

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%
Over £250,000 5%

Leases

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 starting threshold for first-time buyers from £145,000 to £175,000.

From 15 July 2020, the starting threshold for LBTT for all residential property transactions has been increased to £250,000 until 31 March 2021.  This increase in the starting threshold is greater than that provided by the first-time buyer relief. The relief will therefore have no practical effect during the temporary period in which the £250,000 threshold is in place. 

More information including first-time buyer FAQs is available on the Revenue Scotland website.