Land & Buildings Transaction Tax holiday

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Recognising the property market had been hard hit by the coronavirus lockdown, the Scottish Government took steps to support it as lockdown starts to ease. To help buyers and sellers, the amount of Land & Buildings Transaction Tax a buyer pays when purchasing their new home has changed. Here’s what the changes mean to you:

If you buy a property at a price of up to £250,000, you’ll pay NO LBTT

If you buy a property for more than £250,000, you’ll save £2,100

This recognises the importance of the housing market to the Scottish economy.


The general consensus is that 80% of buyers will pay no Land & Buildings Transaction Tax when the buy a new house.

 
This property tax holiday lasts up until 31 March 2021 before reverting to the pre-Covid rates.
 
Normal LBTT costs

Just to refresh your memory, prior to this announcement, the LBTT threshold for home movers was £145,000 (£175,000 for first-time buyers). LBTT is a “progressive” tax. This means that you pay different percentages based on different slices of the purchase price. Here’s an example of how much tax you’d pay before the recent announcement:
 
If you buy a house for, say £300,000, you’ll pay £4,600. Here’s how that’s made up.
You’ll pay 2% LBTT on the proportion of the price between £145,000 and £250,000 (this assumes you’re a home mover and not a first-time purchaser). That amounts to £2,100. You then pay 5% of the difference between £250,000 and £300,000 (£50,000) which amounts to £2,500.

 
Current LBTT costs until 31 March 2021

If we take the same £300,000 purchase and it settles between now and 31 March 2021, the calculations look like this:

 
You pay no LBTT on the price up to £250,000. You then pay 5% on the difference between £250,000 and £300,000 (£50,000) which amounts to £2,500. This means a saving of £2,100.

 
Fortunately, you don’t have to get your pencil and paper out to do these calculations. Revenue Scotland who collect this tax, have an online calculator to help you find out how much LBTT you will be charged. If you’re thinking of buying and want to know how much LBTT you’ll pay, click here to use the Revenue Scotland LBTT calculator.

 
What about the Additional Dwelling Supplement (ADS)?

The ADS applies for the purchase of any second or subsequent residential property and is charged at 4% of the full price – and that’s in addition to any LBTT due. There was no announcement of any relief or change in the ADS rate or rules, so if you buy a second or subsequent residential property, the ADS will have to be paid.

If you would like to find out more or discuss how LBTT or ADS might affect your purchase, please get in touch.

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