Land and Buildings Transaction Tax review: Scottish government policy evaluation 2025-2026

Section C - LBTT Review – Proposed Community Right to Buy relief

1. The Scottish Government has considered whether a new Land and Buildings Transaction Tax (LBTT) relief should be introduced for acquisitions made under the Part 2 Community Right to Buy (CRtB) provisions of the Land Reform (Scotland) Act 2003.

2. Consideration of this issue followed a Stage 2 amendment to the Land Reform (Scotland) Bill 2025 proposing such a relief, and the Scottish Government’s position that this would be more appropriately examined through the ongoing LBTT review. 

3. Community Rights to Buy give community bodies statutory powers to acquire land in the public interest, with Part 2 operating as a pre-emptive right when an owner chooses to sell. While these mechanisms support long-term community resilience and local development, they are complex and resource intensive. 

4. Those calling for relief have highlighted that LBTT can represent a meaningful cost for community bodies already reliant on grant funding. A relief could thus remove a fiscal barrier, improve the viability of community acquisitions, and align Part 2 with the existing LBTT exemption for Crofting Community Right to Buy transactions. The overall potential fiscal impact of such a relief is expected to be low, given the historically small number of qualifying transactions. 

5. However, there are also drawbacks. Any relief would necessitate the introduction of administrative requirements for eligibility verification, and create inequities between community bodies and other purchasers.

6. More significantly, the Scottish Government is currently consulting on major reforms to the entire Community Right to Buy framework, including simplification, alignment across regimes, and potential new mechanisms. With this wider programme still in development, it is unclear how a standalone LBTT relief would fit within a future, potentially redesigned system. 

7. Given this ongoing work, the Scottish Government’s assessment is that it would be premature to amend LBTT at this stage. While the case for a relief has been explored, the interaction with potential upcoming reforms means that changes to tax legislation should not proceed until the direction of Community Right to Buy policy is more clearly established.

8. The potential for relief can be explored further once the wider framework has been finalised, with any further work on this subject to the decisions of Scottish Ministers in the next Session of the Scottish Parliament.