LBTT & ADS


LAND and BUILDING TRANSACTION TAX


Land and Building Transaction Tax (LBTT) came in to effect in Scotland on 1st April 2015.  It replaced UK Stamp Duty and Land Tax (SDLT) which ceased to apply in Scotland on the same day.  LBTT is administered by Revenue Scotland with support from Registers of Scotland.


LBTT is charged on land transaction in Scotland including residential conveyancing transactions.  In the case of residential conveyancing transactions LBTT, where applicable, is payable by the purchaser.


LBTT is charged at various rates usually on most transactions valued at £145,000.00 or more.  However in response to the Corona Virus epidemic, that threshold, as of 15th July 2020, has been increased to £250,000.00.  That change will be in place until at least 31st March 2021.


As well as eliminating LBTT on transactions worth between £145,000.00 and £250,000.00, that change will result in a £2,100.00 LBTT saving in respect of transactions worth in excess of £250,000.00. 


A straightforward LBTT calculator is available on the Revenue Scotland website here.


In 2016 the Scottish Government introduced the Additional Dwelling Supplement (ADS).  This is an LBTT supplement on purchases of additional residential properties in Scotland (such as buy-to-let properties and second homes) worth £40,000.00 or more.  As of 25th January 2019, ADS is 4% of the “relevant consideration” (usually the purchase price).  ADS is not affected by the change in LBTT rates introduced in July 2020 in respect of the Corona Virus epidemic.


Additional Dwelling Supplement is likely to arise in circumstances where a transaction will result in the purchaser (or any one of a number of purchasers) owning more than one residential property at the end of the day on which the transaction settles.  However there are certain reliefs and exemptions and in certain circumstances ADS is chargeable initially it can be claimed back due to the sale of a previous principal residence at a later date.  Therefore if you are concerned at all that ADS may apply to your transaction, please seek advice immediately to ensure that steps can be taken to minimise this liability.


Your solicitor will submit a return on your behalf to Revenue Scotland in respect of any notifiable transaction unless their value in most straightforward domestic conveyaning transaction, the application of any LBTT or ADS is straightforward.  However it is important that it is considered at an early stage in respect of any domestic conveyancing transaction because even a relatively common change in circumstances (such as a delay in a sale transaction or where a married couple or co-habiting couple are separating) can have an impact on liability for LBTT and ADS. 


You should obtain expert advice at the outset of the transaction in respect of this charge.