A Guide to Land and Buildings Transaction Tax LBTT in Scotland
There is a Stamp Duty in Scotland called the Land and Buildings Transaction Tax (LBTT) that you’ll need to pay if you’re purchasing property or land in Scotland. This self assessed tax covers both the residential and non-residential properties, and it is the duty of the buyer to complete and file an LBTT return. Here in this blog, we will be learning what LBTT is, how it functions and how to submit our return.
What is Land and Buildings Transaction Tax (LBTT)?
LBTT is a property transaction tax in Scotland that is analogous to Stamp Duty Land Tax (SDLT) in England as well as in Northern Ireland and Land Transaction Tax (LTT) in Wales. As I have being briefed, if the value of the property or land you buy goes beyond a certain prescribed value, they you will pay LBTT. revenue is set by the Scottish Government and is collected by Revenue Scotland.
What are the LBTT Rates?
LBTT rates are in scale and charged according to the value of the property in the various bands of the scale. Here are the rates for 2024-25:
-
Residential LBTT Rates
|
Band |
Rate |
|
£0 - £145,000 |
0% |
|
£145,001 - £250,000 |
2% |
|
£250,001 - £325,000 |
5% |
|
£325,001 - £750,000 |
10% |
|
Above £750,000 |
12% |
First-Time Buyers get an additional nil-rate band up to £175,000 depending on the conditions that must be met.
-
Non-Residential LBTT Rates
|
Band |
Rate |
|
£0 - £150,000 |
0% |
|
£150,001 - £250,000 |
1% |
|
Above £250,000 |
5% |
LBTT for First-Time Buyers
Beginners buying only one residential property to live in they can be relieved that raises the nil-rate band to £175,000. For residential properties that cost above £,175,000, LBTT is paid on the amount in excess of £ 175,000 only. Be sure to check your eligibility for the relief before claiming it when registering your LBTT return.
LBTT on Second Homes – Additional Dwelling Supplement (ADS)
When buying a residential property for example, a second home or a buy-to-let property – a further 6 per cent will be charged through the Additional Dwelling Supplement (ADS) on the total of the purchase price. ADS also applies to properties occupied by relatives and friends for Child Benefit without being required to pay rent and also shared home state interest in jointly owned homes that cost more than forty Thousand Pounds.
When does ADS apply?
You will need to pay ADS if:
- You currently own one or more residential property anywhere in the world yet you are still investing.
- Using the joint purchase, any buyer owes additional properties.
- The property being purchased is not used as the main home or a second home, within the following five years.
When is an LBTT Return Required?
An LBTT return needs to be filed within 30 days of the transaction date of the effective date). Tardiness of submission can attract penalties and charges from Revenue Scotland in terms of late submission.
How to Submit an LBTT Return?
You can submit an LBTT return in two ways:
- Paper submission: If you’re filing it yourself.
- Online submission: Self-Portrait (or portrait of a friend whose return was done in such a way) The return can be filed online through the HMRC site, and your solicitor/tax professional can register and submit the return on your behalf.
LBTT for Commercial Landlords
As noted already, tenants are generally in charge of LBTT on lease transactions but landlords need to have that information too. LBTT of course operates only on non-residential tenancies, and tax is incurred on both the rent and any premium payable by the tenant. It is customary that landlords will require compliance and information about the LBTT requirement for leases.
LBTT is not straightforward, due to difference rates and additional supplements to the basic LBTT rates. It is advised not to avoid or provoke them accidentally or on purpose and therefore consult a tax expert such as TVR Accountants. If you need help with your LBTT returns and advice that is specific to your circumstances call 01284 332 375 or e-mail info@taxvatreturn.co.uk
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