Our guide to Land and Buildings Transaction Tax (LBTT)

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What is the Land and Buildings Transaction Tax?

Land and Buildings Transaction Tax is a tax payable on property purchases above a certain value in Scotland.

LBTT is the Scottish equivalent of Stamp Duty Lands Tax (SDLT), which applies to properties bought in England and Northern Ireland, and Landing Transaction Tax in Wales

LBTT is a tax the Scottish government makes decisions on, which includes property value threshold changes and LBTT rate updates. Any amendments to LBTT are made yearly and must be signed off by the Scottish Parliament.

LBTT is applied to both those who are first-time buyers, second home purchases and to buyers who have owned a property in Scotland previously.

LBTT also applies to non-residential purchases and leases.

How much LBTT do you pay for a property in Scotland?

How much LBTT is due on a property purchase depends entirely on the type and value of the property being purchased.

LBTT has been divided into a range of bands, with each designed to make sure the charge on property sales in Scotland is proportional to the price of the property. This is aimed at making the tax fairer across the spectrum of property values.

The current LBTT rates for property sales in Scotland are detailed below.

The LBTT percentage rate is only applied to the portion of the price that is above the relevant threshold and up to the next threshold.

If you buy a property for less than the minimum threshold, which is currently properties sold under £145,000, then there is no LBTT to pay.

How are the LBTT rates applied to my property?

LBTT tax is calculated on the property purchase price situated between each band.

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

0% on the first £145,000 = £0

2% on the next £105,000 = £2,100

5% on the next £30,000 = £1,500

Total LBTT = £3,600

Do first time buyers have to pay LBTT?

Yes, first time buyers are required to pay LBTT, although there is relief given to some home buyers that increases the LBTT rate thresholds.

First-time property buyers can apply for relief if they intend to buy a property which will be their only or main place of residence.

Buyers are able to claim the relief when submitting their LBTT return.

To be eligible for first-time buyer LBTT relief, buyers will need to meet certain criteria to qualify. The full criteria is available to be viewed on the Revenue Scotland website.

If a buyer does qualify for the LBTT relief, they’ll be eligible for no tax on properties up to £175,000.

If a first-time purchase is for a property that costs more than £175,000, then LBTT is only due on the value of the property above £175,000.

There’s no upper property value limit, so whatever the price of the property, buyers will receive relief on the first £175,000 of the price.

Below is an example of the first-time home buyers, with relief, LBTT rates.

Does LBTT apply to second homes?

Yes, Land and Buildings Transaction Tax applies for second homes.

Buyers of additional residential properties, such as second homes, will have to pay an extra 6% on the total purchase price of properties costing more than £40,000. This is called the Additional Dwelling Supplement (ADS).

How do you pay your Lands and Buildings Transaction Tax?

A solicitor will typically deal with the Land and Buildings Transaction Tax (LBTT) return, although home buyers can submit it themselves.

If the price of a new home is under the £145,000 LBTT threshold, a return will still need to be submitted (unless exempt) even though no LBTT will need to be paid to Revenue Scotland.

For more information on how to pay LBTT visit Revenue Scotland: How to pay LBTT

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