15th July, 2020

New Land and Buildings Transaction Tax rates explained

New Land and Buildings Transaction Tax rates explained

From 15 July, the Scottish government announced that they are cutting the rate of Land and Buildings Transaction Tax (LBTT), with the threshold increasing from £145,000 to £250,000. These revised rates and bands will run and will apply to all relevant transactions until and including 31 March 2021.

LBTT requires home buyers to pay tax on amounts between bands, as opposed to the full purchase price of a property. LBTT rates in Scotland are different to the taxation rates in the rest of the UK. The following changes have been made following the recent changes to Stamp Duty Land Tax (SDLT) in England and Northern Ireland that took effect on 8 July.

If you are purchasing your primary property, the first £250,000 will be exempt from tax. Between £250,001 and £325,000 you will pay 5% LBTT, then 10% on the amount between £325,001 and £750,000 with any amount thereafter taxed at 12%. This will mean that residential property transactions where the purchase price is under £250,000, and to which the Additional Dwelling Supplement (ADS) does not apply, will result in no payable LBTT.

Visit gov.scot for more information

For transactions where the purchase price is above £250,000, the rates and thresholds that usually apply to the proportion of the purchase price above that amount remain unchanged.

Since 30 June 2018, first-time buyers in Scotland have benefited from a relief on LBTT. This raises the zero-tax threshold for first-time buyers from £145,000 to £175,000. 

Additional Dwelling Supplement

ADS is a further amount of LBTT payable on the purchase of a second residence in Scotland. Where ADS will apply, the new change to the starting threshold will also apply to such transactions. As a result, transactions on a second residential property that is liable to the ADS will not pay the standard rates of LBTT on the first £250,000 of the purchase price. However, the ADS will remain payable at 4% of the total purchase price.

LBTT Calculator

Searching for your dream property in Scotland? To find out how much you will be required to pay for your new home, simply fill out the form on our online calculator.

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