Land and Buildings Transaction Tax (LBTT) is a progressive tax that is applied to residential land and buildings transactions where a chargeable interest is acquired. It is a charge that is more proportionate to the actual price of the property. The percentage rate for each band is applied only to the part of the price over the relevant threshold and up to the next threshold. For example, someone buying a property for £280,000 would pay no tax on the value of the property up to £145,000, 2% tax on the property value between £145,001 and £250,000 and 5% on the property value between £250,001 and £280,000. In this case, total liability for Land and Buildings Transaction Tax (LBTT) would be £3,600 giving an effective tax rate of 1.29% (average percentage rate of tax paid).
Anyone buying a second home in Scotland may be liable for an additional dwelling supplement (ADS) on purchases of additional residential properties in Scotland of £40,000 or more. The current rate is 4% of the total chargeable consideration (usually the property price) for an additional residential property of £40,000 or more. For example, for a £200,000 second home the ADS would be £8,000. The ADS is payable in addition to the LBTT that would be due on the purchase. The rates and bands for LBTT are set out below:
| Purchase price |
Rate of Land and Buildings Transaction Tax (LBTT)
|
| Up to £145,000 |
0% |
| £145,001 - £250,000 |
2% |
| £250,001 - £325,000 |
5% |
| £325,001 - £750,000 |
10% |
| Over £750,000 |
12% |
* Properties under £40,000 are not subject to second home Additional Dwelling Supplement
Land and Buildings Transaction Tax (LBTT) is paid at different rates on residential property transactions and is dependent on the chargeable consideration (usually the purchase price) of your home. You don’t pay tax on the full amount, only the amount that falls into a certain band.
For example, a home costing £280,000 would be charged no LBTT on the first £145,000, 2% on the next £105,000, and 5% on the next £30,000, so you’d pay £3,600 in LBTT.
|
Purchase price
|
Standard LBTT rate
|
|
Up to £145,000
|
0
%
|
|
£145,001 - £250,000
|
2
%
|
|
£250,001 - £325,000
|
5
%
|
|
£325,001 - £750,000
|
10
%
|
|
Over £750,000
|
12
%
|
First-time buyers can claim First-time Buyer relief. You can find out more about what a first-time buyer is on our website. Depending on the purchase price, this relief can reduce your LBTT bill by up to £600.
It means that homes with purchase prices up to £175,000 are effectively free from LBTT for first-time buyers.
For example:
|
Purchase price
|
Standard LBTT bill
|
Amount of First-time Buyer Relief
|
Total to pay for a first-time buyer
|
|
Up to £145,000
|
£0
|
£0
|
£0
|
|
£155,000
|
£200
|
£200
|
£0
|
|
£175,000
|
£600
|
£600
|
£0
|
|
£250,000
|
£2,100
|
£600
|
£1,500
|
|
£325,500
|
£5,900
|
£600
|
£5,300
|
|
£750,500
|
£48,410
|
£600
|
£47,810
|
Land and Buildings Transaction Tax (LBTT) is a progressive tax that is applied to residential land and buildings transactions where a chargeable interest is acquired. It is a charge that is more proportionate to the actual price of the property. The percentage rate for each band is applied only to the part of the price over the relevant threshold and up to the next threshold. For example, someone buying a property for £280,000 would pay no tax on the value of the property up to £145,000, 2% tax on the property value between £145,001 and £250,000 and 5% on the property value between £250,001 and £280,000. In this case, total liability for Land and Buildings Transaction Tax (LBTT) would be £3,600 giving an effective tax rate of 1.29% (average percentage rate of tax paid).
Anyone buying a second home in Scotland may be liable for an additional dwelling supplement (ADS) on purchases of additional residential properties in Scotland of £40,000 or more. The current rate is 4% of the total chargeable consideration (usually the property price) for an additional residential property of £40,000 or more. For example, for a £200,000 second home the ADS would be £8,000. The ADS is payable in addition to the LBTT that would be due on the purchase. The rates and bands for LBTT are set out below:
| Purchase price |
Rate of Land and Buildings Transaction Tax (LBTT)
|
| Up to £145,000 |
0% |
| £145,001 - £250,000 |
2% |
| £250,001 - £325,000 |
5% |
| £325,001 - £750,000 |
10% |
| Over £750,000 |
12% |
* Properties under £40,000 are not subject to second home Additional Dwelling Supplement
