Land and Buildings Transaction Tax - everything you need to know

If you’re buying a home in Scotland you will pay Land and Buildings Transaction Tax (LBTT) on properties costing more than £145,000. 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?

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, you will pay no LBTT on properties costing up to £145,000. This will apply if you’re a first-time buyer and if you’ve owned a property before. Properties costing more than the threshold 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.

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 £145,000 = £0

2% on the next £100,000 = £2,000

5% on the next £35,000 = £1,750

Total LBTT = £3,750

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

£145,000

0%

£145,001

£250,000

2%

£250,001

£325,000

5%

£325,001

£750,000

10%

Over £750,000

12%

Land and Buildings Transaction Tax for first-time buyers

You can get first-time buyer relief if you buy a property which you intend to live in as your only or main residence.

You’ll be able to claim the relief at the point when you submit your LBTT return.

A first-time buyer will need to meet certain criteria to qualify for the tax relief. You can find the full criteria on the Revenue Scotland website.

If you qualify for the relief, you’ll be eligible for zero LBTT for properties up to £175,000.

If your first-time purchase is for a property that costs more than £175,000, you’ll only pay tax on the portion of the price above £175,000. There’s no upper limit, so whatever the price of your property, you’ll still get the relief on the first £175,000 of the price. Here’s a table with some examples:

Purchase price
Tax due - with relief
Tax due - without relief

£150,000

£0

£100

£175,000

£0

£600

£200,000

£500

£1,100

£250,000

£1,500

£2,100

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).

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.

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

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.

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