When buying a property or plot of land in Scotland, Land and Buildings Transaction Tax is payable over a certain value. Applying to residential and non-residential purchases and leases, the amount you have to pay is determined by different factors. These include the property type and value as well as your situation as a buyer, such as whether you’re a home mover, a first-time buyer or buying a second home. So, what is Land and Buildings Transaction Tax and how is it calculated?
What is Land and Buildings Transaction Tax?
Land and Buildings Transaction Tax (LBTT) is charged when you buy property or land over a certain price in Scotland. It replaced Stamp Duty Land Tax (SDLT), which is payable in England and Northern Ireland, on 1st April 2015. This fully devolved tax is administered and collected by Revenue Scotland.
As the equivalent of SDLT, it works in a similar way, with thresholds set for the rates charged. The tax is applied to residential and commercial land and buildings transactions, including commercial properties and leases.
The current LBTT rates are to be reviewed in 2025, beginning in the spring and continuing throughout the current parliamentary term. As such, the rates and bands detailed below will remain as they are until 2026, including the first-time buyer relief.
How much Land and Buildings Transaction Tax do you have to pay?
The amount you need to pay depends on whether you’re buying residential property – and for what purpose – or commercial property and the property value. Relief is also given to first-time buyers.
Residential properties
Different rates are payable depending on whether you’re a first-time buyer, a home mover, purchasing a buy-to-let property or buying a second home.
Standard LBTT rates
If you’re selling your home and buying a new one to move into, the standard LBTT rates apply. These are:
- £0–£145,000: 0%
- £145,001–£250,000: 2%
- £250,001–£325,000: 5%
- £325,001–£750,000: 10%
- Above £750,000: 12%
This means that no LBTT is payable for a value below £145,000 and then the rates are charged in bands.
First-time buyer LBTT rates
If you’re a first-time buyer, you benefit from relief on this tax up to a property value of £175,000. This means that no LBTT is payable up to this amount and then the normal bands apply, as detailed below:
- £0–£175,000: 0%
- £175,001–£250,000: 2%
- £250,001–£325,000: 5%
- £325,001–£750,000: 10%
- Above £750,000: 12%
Additional Dwelling Supplement
For some residential property transactions, the Additional Dwelling Supplement (ADS) applies. These transactions include purchasing a buy-to-let property, a second home, a holiday home or a property to be used by family and friends, even if you don’t charge them any rent.
The ADS rate was changed from 6% of the purchase price to 8% on 4th December 2024. This took effect from 5th December. This means that if the missives were signed on or before 4th December, the rate of 6% will still apply. For any transactions on or after 5th December, the new additional rate of 8% applies. If the value of the property is less than £40,000, the ADS is not applicable.
Non-residential properties
Different bands and rates apply to non-residential or mixed-use properties or land:
- £0–£150,000: 0%
- £150,001–£250,000: 1%
- Above £250,000: 5%
Commercial leases
For non-residential land or property leases in Scotland, the amount of LBTT payable depends on the rent payable under the lease and other chargeable considerations. For example, a lease premium.
Rent
LBTT is payable on the rent using the following bands and rates (applicable for transactions on or after 7th January 2020):
- £0–£150,000: 0%
- £150,001–£2,000,000: 1%
- Above £2,000,000: 2%
Lease premiums
If LBTT is also due for a chargeable consideration, the standard non-residential property bands and rates detailed above are charged. (These bands and rates apply to transactions on or after 25th January 2019.)
Prepare for your property purchase in Scotland
If you’re interested in buying a property in Scotland but are unsure as to how much LBTT you’ll have to pay, give us a call on 01322 907 000. Our mortgage brokers can guide you on this and other expenses involved when purchasing property, such as survey, mortgage, legal and insurance costs.
If you’re unsure of how the buying process differs in Scotland, we can advise you on this as well as the financial help available. When you’re ready to proceed, we can also arrange your mortgage or other type of finance for your purchase as well as your insurance cover.