Land and Building Transaction Tax (LBTT): Scotland
In Scotland, Stamp Duty is called Land and Buildings Transaction Tax or LBTT for short.
LBTT is a tax payable when you buy residential and commercial land and buildings (as well as commercial leases) situated in Scotland.
Scotland used to have the same Stamp Duty system as the rest of the UK but it brought in its own system as from April 2015. Although the basic concept of Land and Buildings Transaction Tax is the same as Stamp Duty – it is a tax on buying property – both the way it works and the rates of tax are different.
The LBTT system in Scotland, together with the fact that average property prices in Scotland are lower – the 2019 average property price in Scotland was £151,891 – means that most buyers in Scotland pay less than buyers in England.
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Land and Buildings Transaction Tax Useful Statistics
Source: Revenue Scotland
LBTT (excluding Additional Dwelling Supplement) has increased each year since its introduction. It was £260 million in 2017/18 representing an increase of £46 million (21%) on the previous year. This was mainly due to an increase in average residential property prices in Scotland.
Buyers in the City of Edinburgh paid around a third of all LBTT paid in Scotland in each of the last three years.
LBTT paid has risen in every part of Scotland since it was introduced except in Aberdeenshire and Aberdeen City where it has decreased by 33% and 23% respectively.
It is estimated that £93 million of LBTT revenue was given in reliefs including first-time buyer relief in 2017/18, but this is falling year on year.
Current LBTT Rates In Scotland
LBTT in Scotland is charged at the relevant percentage rate on the amount of the purchase which falls within each band as follows: Property Value: LBTT Rate Up to £145,000 0% Over £145,000 (Up to and including £250,000) 2% Over £250,000 (Up to and including £325,000) 5% Over £325,000 (Up to and including £750,000) 10% Over £750,000 12%
So, for example, if you buy a house in Scotland for £280,000 the LBTT you owe is:
0% for the first £145,000
2% for the next £105,000
5% for the next £30,000
Total LBTT = £3,600
But the easiest way to find out how much LBTT you might have to pay is to use a Land and Buildings Transaction Tax calculator.
LBTT For Buy-to-Let And Second Homes
If you purchase a buy to let property in Scotland or a second home in Scotland then what is known as the Additional Dwelling Supplement or ADS is charged.
ADS in Scotland is 4% on top of the standard rate of LBTT.
ADS only applies to purchases of £40,000 or more.
This means that if you buy a buy to let property the total LBTT you have to pay including ADS is as follows: Property Value: LBTT Rate Up to £145,000 4% Over £145,000 (Up to and including £250,000) 6% Over £250,000 (Up to and including £325,000) 9% Over £325,000 (Up to and including £750,000) 14% Over £750,000 16%
LBTT For First Time Buyers
First-time buyers in Scotland can claim first-time buyer relief from Land and Buildings Transaction Tax for their own home only. This measure was introduced to make it easier for first time buyers in Scotland to buy their first home.
The LBTT rate for Scotland’s first-time buyers is 0% up to a purchase price of £175,000 instead of £145,000. First-time buyers pay the normal rates of LBTT above £175,000.
So for example on a property priced at £200,000 the normal amount of LBTT payable would be £1,100 but first-time buyers in Scotland will pay just £500.
The easiest way to find out how much LBTT you might have to pay is to use a Land and Buildings Transaction Tax Calculator.
Other Rates Of LBTT: Non-Residential Property
There are different bands/rates of LBTT that apply to non-residential property in Scotland. These are: Property Value: LBTT Rate Up to £150,000 0% £150,000 to £250,000 1% Above £250,000 5%
When Are You Entitled To A LBTT Refund?
In some cases, you’re entitled to a refund of the Land and Buildings Transaction Tax you’ve paid. This may be because you had to pay an Additional Dwelling Supplement since the property you bought was not your main home. But you then sold your main home within 18 months.
The refund process is designed so that people who buy a new home before selling their old one don’t have to pay the 4% extra ADS.
When Do You Pay LBTT?
If you use a solicitor to buy your house in Scotland they will file the Land Transaction Return for you and pay any LBTT due on your behalf.
An LBTT return must be submitted and any LBTT due paid to Revenue Scotland before the Keeper of the Registers of Scotland (RoS) can register the title in your name.
Changes To LBTT
The way Land and Buildings Transaction Tax works are set by the Scottish Government and it is administered by Revenue Scotland with support from Registers of Scotland (RoS).
LBTT has been changed slightly since it was introduced in 2015. Any changes to the LBTT system or LBTT rates are usually announced by the Scottish Finance Secretary in the Scottish Budget in December each year.
LBTT in Scotland may be changed in future if the Stamp Duty system in England is also changed. The Scottish Government has tended to mirror the changes that have been made to Stamp Duty in England – but it does not have to.
For this reason, it is always important to make sure you are using the latest version of a good Land and Buildings Transaction Tax Calculator to calculate your LBTT.
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