Land and Buildings Transaction Tax - everything you need to know

If you’re buying a home in Scotland from 15 July 2020 you will pay a reduced rate of Land and Buildings Transaction Tax (LBTT) until 31 March 2021. If you’re buying your main home, you will pay no LBTT on purchases under £250,000. If you’re buying an additional property, you might need to pay an extra 4% in on the total purchase price of the property, as well as the standard rates of LBTT that may apply.

What is Land and Buildings Transaction Tax?

Use our Land and Buildings Transaction Tax calculator to find out how much you’ll pay.

Land and Buildings Transaction Tax (LBTT) is a tax you might have to pay if you buy a residential property or piece of land in Scotland.

If you’re buying your main property up until 31 March 2021, you will pay no LBTT on properties costing up to £250,000. This will apply if you’re a first-time buyer and if you’ve owned a property before.

Properties costing more than £250,000 will pay LBTT based on the value of the property.

If you’re buying a second home, you’ll you may need to pay an additional dwelling supplement of 4% based on the total purchase price of properties costing more than £40,000.

This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.

If you’re buying in Wales, find out more about Land Transaction Tax.
If you’re buying in England or Northern Ireland, find out more about Stamp Duty.

How much is Land and Buildings Transaction Tax?

There are several rate bands for Land and Buildings Transaction Tax (LBTT).

The tax is calculated on the part of the property purchase price falling within each band.

For example, if you buy a house for £280,000, the LBTT you owe is calculated as follows:

0% on the first £250,000 = £0

5% on the next £30,000 = £1,500

Total LBTT = £1,500

This represents a saving £1,100 based on the rates prior to the temporary change in LBTT.

Land and Buildings Transaction Tax (LBTT) rates

Minimum property purchase price Maximum property purchase price Stamp Duty rate (only applies to the part of the property price falling within each band)
£0 £250,000 0%
£250,001 £325,000 5%
£325,001 £750,000 10%
Over £750,000   12%

Land and Buildings Transaction Tax on second homes

Buyers of additional residential properties, such as second homes, will have to pay an extra 4% on the total purchase price of properties costing more than £40,000. This is called the Additional Dwelling Supplement (ADS).

Due to the increase in the starting threshold and where the ADS does apply, the change to the starting threshold will also apply to property transactions. This means that a residential property transaction that is liable to the ADS will not pay the standard rates of LBTT on the first £250,000 of the purchase, however the ADS will remain payable at 4% of the total purchase price.

When do you have to pay Land and Buildings Transaction Tax?

You’ll need to submit a Land and Buildings Transaction Tax (LBTT) return to Revenue Scotland.

For more information on how and when to pay LBTT, please visit Revenue Scotland.

If you fail to submit a LBTT return, Revenue Scotland might charge you penalties and interest.

find out more about Land and Buildings Transaction Tax penalties on Revenue Scotland.

When is Land and Buildings Transaction Tax not payable?

There are other circumstances in which LBTT is either not payable or can be reduced:

Slightly over rate band: If the price is only just within a higher band, ask the seller or estate agent if they would accept a slightly lower price.

Transfer of property in separation or divorce: If you’re divorcing or separating from your spouse or partner as part of an agreement or court order, there’s no LBTT to pay if you transfer a proportion of your home’s value to them. If joint owners are unmarried and not in a civil partnership when they transfer an interest in land or property from one joint owner to another then you may have to pay SDLT.

Transfer of deeds: If you get land or property under the terms of a will, there’s no need to tell Revenue Scotland and you won’t pay Land Transaction Tax. This applies even if you take on an outstanding mortgage on the property on the date the person died. This is on condition that no other consideration is given.

If you get property as a gift you won’t pay Land Transaction Tax as long as there’s no outstanding mortgage on it. But if you take over some or all of an existing mortgage, you’ll pay Land Transaction Tax if the value of the mortgage is over the Land Transaction Tax.

However, if you exchange properties with another person, you will each have to pay LTT on the property you receive based on its market value.

How to pay Land and Buildings Transaction Tax

Usually your solicitor will deal with the Land and Buildings Transaction Tax (LBTT) return, although you can do it yourself.

Either way, you’re responsible for making sure it’s all submitted on time.

If the price of your new home is under £250,000, you must still submit a return (unless exempt) even though you won’t need to pay any LBTT.

Find out more about how to pay Land and Buildings Transaction Tax on Revenue Scotland.

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