What do you mean by Land and Buildings Transaction Tax (LBTT)?
When you buy a piece of land or residential property in Scotland, having value of more than £145,000 for first homes and more than £40,000 for second homes, you are liable to pay land and buildings transaction tax. It is applicable on both freehold & leasehold properties. Land and buildings transaction tax is valid on both the properties - Property you buy with mortgage or right away.
In case you are buying residential property or a piece of land in England or Northern Ireland, you are liable to pay Stamp Duty Land Tax whereas Land Transaction Tax (LTT) is charged when you buy residential property or piece of land in Wales.
How much is Land and Buildings Transaction Tax?
There are several tax bands which come under land and buildings transaction tax. Calculation of Land and buildings transaction tax depends upon –
- Property purchase price
- First time home buyer or Second time home buyer
For Example - Suppose you bought a residential property for £300,000, land and buildings transaction tax amount will be –
Total Land and Buildings Transaction Tax (LBTT) = £7100
Land and Buildings Transaction Tax Rates
Calculation of land and buildings transaction tax on the basis of property value falling within each band –
| Purchase price | Land and Buildings Transaction Tax Rates |
| £0 - £145,000 | 0% |
| £145,001 - £250,000 | 2% |
| £250,001 - £325,000 | 5% |
| £325,001 - £750,000 | 10% |
| Exceeding £750,000 | 12% |
Non-Residential LBTT Rates
| Purchase value | Non-residential value |
| £0 - £150,000 | 0% |
| £150,001 - £250,000 | 1% |
| Exceeding £250,000 | 5% |
Land and Buildings Transaction Tax on Second Homes
If you are buying an additional property in Scotland having value of more than £40,000, you are liable to pay land and buildings transaction tax. LBTT paid on second homes is 4% extra over the current rates for each tax band.
Land and Buildings Transaction Tax Relief for First Time Home Buyers
If you are buying a property for living in & it is your only main residence, you are entitled for first time buyer’s relief. You will only be able to claim this relief after submitting LBTT return to the Revenue Scotland authority.
In order to get eligible for tax relief, you need to meet certain specified criteria available on the Revenue Scotland website. Read the full criteria here –
In case you qualify for the tax relief, you don’t need to pay any LBTT for the property value up to £175,000. See the table below to know the relief provided on the property price to the first home buyers –
| Purchase price | Due tax – with relief | Due tax – without relief |
| £150,000 | £0 | £100 |
| £175,000 | £0 | £600 |
| £200,000 | £500 | £1,100 |
| £250,000 | £1,500 | £2,100 |
Pay Land and Buildings Transaction Tax
When you need to pay Land and Buildings Transaction Tax?
You need to pay land and buildings transaction tax, when you pay LBTT return to Revenue Scotland authority. In case, you fail to submit land and buildings transaction tax return to revenue Scotland authority, they might charge you with penalties & interest.
When Land and Buildings Transaction Tax not payable?
When you buy property as main residence having value of less than £180,000, you may avoid paying land and buildings transaction tax to the revenue Scotland authority. There are many situations in which LBTT is either not payable or can be reduced –
- Slightly over rate band – If the property price lies into a slightly higher rate tax band category, you can request the seller or the estate agent to accept a little bit lower price.
- Transfer of property in separation of divorce – If due to court order or an agreement, you are divorcing or separating from your partner - you are not entitled to pay land and buildings transaction tax (if you are transferring some of the house proportion of your home value to him/her). In case land or property having unmarried joint owners, at the time of transferring the interest in land or property to some other joint owner, it might be possible that you need to pay SDLT.
- Transfer of deeds – If you are getting piece of land or property by will, you are not liable to pay land and buildings transaction tax to the Revenue Scotland authority. This rule is even applied at the time when there is outstanding amount of mortgage at the time of person’s death.
There is no need to pay Land and buildings transaction tax in case there is no outstanding mortgage on the property you are getting as a gift. In case you take over the part or the entire existing mortgage, you will be liable to pay land and buildings transaction tax (If mortgage value is more than the value of land and buildings transaction tax). However, in case of exchange of property with another person, both of you need to pay LBTT based on the market value of the received property.
How to Pay Land and Buildings Transaction Tax?
Generally, Solicitor is the person who files your land and buildings transaction tax return. Even, you can do it yourself. You must submit your land and buildings transaction tax return on time unless you will be held responsible for its late submission unless it is submitted by Solicitor.
If your value of property is less than £145,000 & you are not entitled to pay LBTT, still you need to file land and buildings transaction tax return to the revenue Scotland authority.
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