Until recently, people purchasing properties in Scotland paid Stamp Duty Land Tax (SDLT), but in 2015 this changed and LBTT was introduced. LBTT is an acronym that stands for Land & Building Transaction Tax. Often people still refer to LBTT as Stamp Duty as this term is still used in the rest of the UK, but in Scotland LBTT is the correct term for this transactional tax. In July 2020 the Scottish Government announced a short term change to LBTT in an effort to support homebuyers and the economy whilst recovering from the COVID-19 pandemic. This means when purchasing a property some buyers currently do not need to pay any LBTT, or if you do need to pay LBTT then you would pay less. This is because whilst LBTT rates remain as before if your purchase prices exceeds £250,000 you do still benefit from there no longer being 2% due on the value of the property between £145,000 and £250,000.

How much LBTT do I have to pay?

LBTT is a tiered tax. The thresholds at the moment are:

15 July 2020 to 31 March 2021
0% up to £250,000
5% above £250,000 to £325,000
10% above £325,000 to £750,000
12% over £750,000

Pre 15 July 2020
0% up to £145,000
2% above £145,000 to £250,000
5% above £250,000 to £325,000
10% above £325,000 to £750,000
12% over £750,000

These are set to be reviewed on 31st March 2021. So arguably moving sooner rather than later has its benefits!

Why do we have to pay LBTT?

In Scotland a property's change of ownership needs to be registered at the Land Register. The register always checks that the necessary return has been made to Revenue Scotland, and where applicable, the necessary LBTT has been paid – this is a compulsory check before proceeding with the registration at the Land Register. If this has not happened, the registration won't take place.

First Time Buyers Relief

If you are a first time buyer then there is a first time buyers relief for the first £175,000 of the purchase price, but this is irrelevant whilst the government has its LBTT freeze in place. Post March 31st 2021 this relief may be applicable. Read our first time buyers relief blog.

Additional Dwelling Supplement (ADS)

Unfortunately, there are situations where you might need to pay more than is outlined above. If you are purchasing second home that does not replace your existing primary residence, then you will need to pay an Additional Dwellings Supplement. For more information on when Additional Dwellings Supplement (ADS) is applicable please click here.

Important to Note

LBTT is a self-assessed tax which means it is your responsibility to complete and submit your LBTT return and pay any tax due, or to instruct someone to do this on your behalf. If you would like us to provide support or a referral, please just ask. For more information on any of the above please do not hesitate to get in touch.