Land and Buildings Transaction Tax is the name given to the tax that you pay when purchasing or leasing Land and Properties in Scotland. This tax replaced the more familiar SDLT on 1st April 2015. Any purchase of a property to the value of £40,000 and above must be notified to Revenue Scotland, even if there is no tax to pay on the transaction.
This tax gets paid to Revenue Scotland as a devolved tax, meaning that the rates and banding for the tax are set by the Scottish Government.
The current rates and banding are:
|
Purchase price |
LBTT rate |
|
Up to £145,000 |
0% |
|
Above £145,000 to £250,000 |
2% |
|
Above £250,000 to £325,000 |
5% |
|
Above £325,000 to £750,000 |
10% |
|
Over £750,000 |
12% |
Calculation of the rate of tax can easily be done on Revenue Scotland’s website here: https://www.revenue.scot/land-buildings-transaction-tax/tax-calculator/lbtt-property-transactions-calculator
LBTT differs from SDLT in that it is a progressive tax which is more proportionate to the price of the property. Each band of tax is only applied to the part of the price which lies within that specific band.
For example, if you purchase a property at £290,000 LBTT is charged as follows:
- On the first £145,000 - £0.00
- On the next £105,000 (being the amount in the 2nd bracket) – 2% of £105,000 - £2,100
- On the final £40,000 (being the amount in the 3rd bracket) – 5% of £40,000 - £2,000
- Total Tax = £4,100
There are also a number of exemptions and reliefs available which are very specific to various types of transactions.
A very important relief is that one given to First Time Buyers. The zero tax threshold for properties bought by first time buyers is £175,000, meaning that up to 80% of first-time buyers will pay no stamp duty at all. If your first home is more expensive than this threshold, you’ll still benefit from the relief on the first £175,000 of the price, meaning you could save up to £600. The illustration below shows the LBTT rates for first-time buyers.
All other reliefs and exemptions can be found on Revenue Scotland’s website.
The payment of LBTT is most commonly done by your solicitor as part of your transaction. Importantly the LBTT Return form is a Tax Return, meaning that there are penalties for failing to complete the return or for submitting it late, or for submitting incorrect returns. Revenue Scotland also requires you to keep a copy of the return for up to 5 years from the transaction.
Should you wish to speak to us regarding LBTT, please do not hesitate to contact the legal office on 01721 720131 or email This email address is being protected from spambots. You need JavaScript enabled to view it..
Emma Lawrie, Associate, Blackwood & Smith
