Publication - Factsheet

Scottish Budget 2020-2021: Land and Buildings Transaction Tax

Information on changes to Land and Buildings Transaction Tax (LBTT).

Published:
6 Feb 2020
Scottish Budget 2020-2021: Land and Buildings Transaction Tax

The Scottish Budget 2020-2021, published on 6 February 2020, introduced changes to Land and Buildings Transaction Tax (LBTT).

Further information, including a calculator to help you work out how much tax you have to pay, can be found on Revenue Scotland’s website: www.revenue.scot.

Leases of non-residential property: tax rates and bands

A new rate of 2% will be payable where the net present value (NPV) of the rent payable under the lease is above £2 million.  The revised rates and bands are as follows:

NPV of rent payable Rate of tax
Up to £150,000 0%
£150,001 to £2 million 1%
Above £2 million 2%

When the changes to LBTT will take effect 

The revised rates and bands will apply to transactions where the effective date of the transaction is on or after 7 February 2020.

However, the revised rates and bands will 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. A transitional provision is included in the legislation to provide for this.

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.

Parliamentary Process

The change to the rates and bands is being made through secondary legislation via a provisional affirmative order which allows the change to be introduced with near immediate effect. This means that while the change was announced as part of the Scottish Budget, it is not linked to, or dependent on, the Budget Bill.

The Land and Buildings Transaction Tax (Tax Rates and Tax Bands)(Scotland) Amendment Order 2020 (the Order) was laid in the Scottish Parliament on 6 February 2020.  It will be considered by the Finance and Constitution Committee prior to a formal vote in Parliament.

If Parliament votes to approve the Order the change will be given permanent effect.  If Parliament does not approve the Order, the change will cease to have effect and the previous rates and bands will apply, with any additional tax paid during the period the Order was provisionally in force becoming repayable.

This page will be updated with the key dates for Parliament’s consideration of the Order as and when they become known.