A Guide to Land and Buildings Transaction Tax (LBTT) in Scotland
The Land and Buildings Transaction Tax (LBTT) is Scotland’s equivalent of Stamp Duty, applied to property and land purchases. It is a progressive tax, meaning the percentage paid increases as the property price rises. Understanding LBTT is essential for homebuyers, property investors, and developers to manage costs effectively.
What is LBTT?
LBTT is a tax payable when purchasing residential or non-residential property in Scotland. It replaced the UK-wide Stamp Duty Land Tax (SDLT) in Scotland on 1 April 2015. The amount of LBTT due depends on the purchase price and whether the property is residential, non-residential, or subject to the Additional Dwelling Supplement (ADS).
LBTT Rates for Residential Properties (2024)
The following rates apply to residential property purchases:
- Up to £145,000 – 0%
- £145,001 to £250,000 – 2%
- £250,001 to £325,000 – 5%
- £325,001 to £750,000 – 10%
- Over £750,000 – 12%
Example Calculation
If you buy a property for £300,000, LBTT is calculated as follows:
- £145,000 at 0% = £0
- £105,000 at 2% = £2,100
- £50,000 at 5% = £2,500
Total LBTT = £4,600
Additional Dwelling Supplement (ADS)
If you are purchasing a second home or a buy-to-let property, you must pay an Additional Dwelling Supplement (ADS) on top of standard LBTT. This is currently 6% of the total purchase price.
For example, if you purchase a buy-to-let property for £200,000, ADS would be 6% of £200,000 = £12,000, payable in addition to standard LBTT.
LBTT for Non-Residential and Commercial Properties
LBTT also applies to non-residential properties, such as office buildings and land purchases. The rates are:
- Up to £150,000 – 0%
- £150,001 to £250,000 – 1%
- Over £250,000 – 5%
First-Time Buyer Relief
First-time buyers in Scotland benefit from an increased LBTT threshold of £175,000, meaning they pay 0% on the first £175,000 of the purchase price. This can result in significant savings for those entering the property market.
How to Pay LBTT
LBTT must be paid to Revenue Scotland within 30 days of the transaction being completed. Your solicitor will usually handle the submission and payment process on your behalf.
Conclusion
LBTT is an important consideration when buying property in Scotland. Understanding the tax rates, Additional Dwelling Supplement, and reliefs available can help you budget effectively. If you are buying property, it is always advisable to seek professional guidance to ensure compliance with LBTT regulations.