Land and Buildings Transaction Tax: review
An independent analysis of certain aspects of Land and Buildings Transaction Tax (LBTT) policy.
Appendix 1: Full timeline of legislation
Below we summarise primary and secondary legislation pertaining to LBTT, the conferral of devolved taxation powers, the collection and management of LBTT, the setting of rates and bands, the introduction and modification of reliefs and supplements, transitional and administrative arrangements, and subsequent amendments.
Timeline of primary legislation (Acts of Scottish Parliament)
Granted the Scottish Parliament power to replace the UK Stamp Duty Land Tax (SDLT) with a devolved equivalent for taxation of land transactions in Scotland. The Act also defined the scope of this devolved tax as a transaction tax applying to acquisitions of interests in land in Scotland (Scottish Government, 2012b).
Land and Buildings Transaction Tax (Scotland) Act 2013
Introduced LBTT as the basic framework for taxation of land transactions in Scotland, setting out the process by which LBTT operates (Figure 1). LBTT replaced SDLT in Scotland from 1st April 2015 (Scottish Government, 2013a; Revenue Scotland, 2023c).
Revenue Scotland and Tax Powers Act 2014
Put in place a statutory framework to enable the collection and management of LBTT and the Scottish Landfill Tax (the two devolved taxes under the Scotland Act 2012). It establishes Revenue Scotland as the tax authority responsible for collecting Scotland’s devolved taxes from 1st April 2015 (Scottish Government, 2014a).
Land and Buildings Transaction Tax (Amendment) (Scotland) Act 2016
The 2016 Act amended the 2013 Act to introduce the ADS (Scottish Government, 2018c).
Land and Buildings Transaction Tax (Relief from Additional Amount) (Scotland) Act 2018
Gave retrospective effect to the Land and Buildings Transaction Tax
Timeline of secondary legislation (Scottish Statutory Instruments)
The Land and Buildings Transaction Tax (Scotland) Act 2013 (Commencement No. 1) Order 2014 - Brought into force the 2013 LBTT Act’s enabling provisions, allowing Scottish Ministers to make subordinate legislation (Goundar, 2014).
The Land and Buildings Transaction Tax (Prescribed Proportions) (Scotland) Order 2014 - Prescribed the proportions of tax payable when claiming MDR and acquisition relief, setting them at 25% and 12.5% of the tax that would otherwise be due (Scottish Government, 2014).
The Land and Buildings Transaction Tax (Qualifying Public or Educational Bodies) (Scotland) Amendment Order 2014 - Updated the 2013 LBTT Act’s list of qualifying public or educational bodies in sale-and-leaseback arrangements[16] following the Post-16 Education (Scotland) Act 2013 (Scottish Parliament, 2015).
The Land and Buildings Transaction Tax (Definition of Charity) (Relevant Territories) (Scotland) Regulations 2014 - Expanded the scope of LBTT charities relief to include charities registered in Iceland, Norway, and Liechtenstein, in line with UK tax treaties (Scottish Parliament, 2015).
The Land and Buildings Transaction Tax (Administration) (Scotland) Regulations 2014 - Enabled taxpayers to apply to Revenue Scotland to defer payment of LBTT in certain situations, mirroring the deferral mechanism used for SDLT in the same circumstances (Goundar, 2015).
The Land and Buildings Transaction Tax (Ancillary Provision) (Scotland) Order 2014 - Empowered the Keeper of the Registers of Scotland (the official responsible for maintaining property records in Scotland) not to accept applications for registration of a deed implementing a notifiable land transaction until a tax return and payment have been made (Scottish Government, 2014).
The Land and Buildings Transaction Tax (Transitional Provisions) (Scotland) Order 2014 - Ensured that transactions spanning the transition from SDLT to LBTT are taxed only once, under either SDLT or LBTT as appropriate (Revenue Scotland, 2023c).
The Land and Buildings Transaction Tax (Transitional Provisions) (Scotland) Amendment Order 2015 - Made a minor technical amendment to the 2014 Transitional Provisions Order (Scottish Government, 2015b).
The Land and Buildings Transaction Tax (Addition and Modification of Reliefs) (Scotland) Order 2015 - Introduced five LBTT reliefs corresponding to reliefs available under SDLT – namely: (i) friendly societies relief, (ii) building societies relief, (iii) visiting forces and international headquarters relief, (iv) property accepted in satisfaction of tax relief, and (v) lighthouses relief. It also modified the conditions for registered social landlords to qualify for LBTT relief, and provided full relief for transactions involving multiple crofts under the Crofting Community Right to Buy[17] (Scottish Government, 2015c).
The Land and Buildings Transaction Tax (Scotland) Act 2013 (Commencement No. 2) Order 2015 - Brought into force the full provisions of the 2013 LBTT Act on 1st April 2015 (Scottish Government, 2015d).
The Land and Buildings Transaction Tax (Sub-sale Development Relief and Multiple Dwellings Relief) (Scotland) Order 2015 - Established a sub-sale development relief for the first buyer in a land transaction involving sub-sale arrangements[18] where significant development is expected to take place. The Order also amended scope of MDR to apply only to the acquisition of multiple dwellings, not multiple dwellings and other property (Scottish Government, 2015a).
The Land and Buildings Transaction Tax (Tax Rates and Tax Bands) (Scotland) Order 2015 – Set LBTT tax bands and percentage tax rates for each band in the case of residential property transactions and for non-residential property transactions and leases (Scottish Government, 2015e).
The Land and Buildings Transaction Tax (Open-ended Investment Companies) (Scotland) Regulations 2015 - Established a relief from LBTT for authorised unit trusts[19] converting to or amalgamating with an open-ended investment company[20] (Scottish Government, 2015f).
The Land and Buildings Transaction Tax (Additional Amount-Second Homes Main Residence Relief) (Scotland) Order 2017: Applied a retroactive amendment to ADS rules to offer relief in certain situations where a main residence is being replaced by spouses and cohabitants (Dallas McMillan, 2017).
The Land and Buildings Transaction Tax (First-Time Buyer Relief) (Scotland) Order 2018 - Introduced the first-time buyer relief (Revenue Scotland, 2024e).
The Land and Buildings Transaction Tax (Group Relief Modification) (Scotland) Order 2018 - Extended LBTT group relief to intra-group property transfers involving share‑pledge security arrangements[21], thus aligning with the rest of the UK (Hillan, 2018).
The Land and Buildings Transaction Tax (Tax Rates and Tax Bands etc) (Scotland) Amendment Order 2018 - Reduced the lower rate of non-residential LBTT from 3% to 1%, increased the upper rate of non-residential LBTT from 4.5% to 5%, while lowering the threshold for the upper rate from £350,000 to £250,000, and increased the ADS rate from 3% to 4% (Scottish Government, 2018b).
The Land and Buildings Transaction Tax (Tax Rates and Tax Bands) (Scotland) Amendment Order 2020 - Introduced a new 2% LBTT band in relation to non-residential leases where the NPV of the rent payable under the lease is above £2 million (Scottish Government, 2020a).
The Land and Buildings Transaction Tax (Tax Rates and Tax Bands) (Scotland) Amendment (No. 2) (Coronavirus) Order 2020 - Temporarily increased the residential LBTT nil-rate band from £145,000 to £250,000 in response to COVID-19 for transactions up to and including 31st March 2021 (Scottish Government, 2020b).
Increased the ADS rate from 4% to 6% (Scottish Government, 2022b).
The Land and Buildings Transaction Tax (Green Freeports Relief) (Scotland) Order 2023
Established a new LBTT relief for land transactions in designated sites deemed to be underdeveloped, as part of the Green Freeports initiative[22] (Scottish Government, 2023c).
The Land and Buildings Transaction Tax (Miscellaneous Amendments) (Scotland) Order 2024
Made various changes to LBTT and ADS provisions, including creating a targeted LBTT relief for local authorities, introducing new ADS exemptions, and amending the timelines in ADS legislation from 18 to 36 months (Scottish Government, 2024b).
Further increased the ADS rate from 6% to 8% (Scottish Government, 2024c).
Ensured group relief is available in instances of non-partition demergers[23], and clarified the timing of the development period for sub-sale development relief (Scottish Government, 2025c).
Contact
Email: devolvedtaxes@gov.scot