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

Summary

This initial evaluation of selected elements of Land and Buildings Transaction Tax (LBTT) policy has drawn on a varied evidence base, including operational data from Revenue Scotland, legislative analysis, and the insights of a range of stakeholders engaged through the LBTT Review Working Group.

This combination of quantitative and qualitative evidence has provided a comprehensive picture of how various aspects of current LBTT arrangements operate in practice and where challenges or opportunities for refinement may lie.

Stakeholder contributions have been central to identifying the practical implications of the existing legislation. Participants in the review working group provided detailed reflections on policy intent, administrative burdens, taxpayer experience, operational challenges, and the wider ethical and fairness considerations that arise in sensitive cases. Their engagement has helped clarify areas where the current system works effectively, as well as identifying potential areas for change to assist e proportionality, clarity, or administrative efficiency.

Clear themes have emerged through this work. In relation to the lease review regime, stakeholders highlighted concerns about complexity, proportionality, and low awareness among taxpayers, alongside suggestions for differentiated approaches, extended review cycles, and simplified processes for nil returns.

For the Additional Dwelling Supplement (ADS), the Working Group emphasised the difficulty of defining and administering “exceptional circumstances” fairly, the ethical challenges in evidencing highly personal situations, and the need for precision and appeal rights should any such framework be developed.

Regarding Community Right to Buy, evidence indicates that there are potential benefits in principle from an LBTT relief, but also highlighted the risk of premature legislative change given the ongoing wider reforms to the Community Right to Buy framework.

This report does not propose specific reforms but seeks to set out the issues clearly so that they can be considered in depth at the appropriate time. The insights gathered are intended to provide a robust foundation for future analysis, enabling Ministers in the next parliamentary term to determine whether, and how, further work should be taken forward.