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Scotland: Land and Buildings Transaction Tax Rates Announced

13th October 2014

From 1 April 2015 the new Land and Buildings Transaction Tax (LBTT) will replace Stamp Duty Land Tax (SDLT) for land transactions in Scotland.  

This is the first tax raised by a Scottish Parliament since 1707, and will be a progressive, rather than "slab" tax.  In a move designed to remove the distortions in house prices associated with bunching of sales around the current SDLT thresholds, LBTT will apply in progressive rates, payable on the proportion of the total value which falls within each band.

The LBTT rates have now been announced as follows:

Residential Non-Residential Non-Residential Leases
   Rate     Rate      Rate
Up to £135,000 Nil Up to £150,000 Nil Up to £150,000 Nil
£135,000 to £250,000 2% £150,001 to £350,000 3% Over £150,000 1%
£250,001 to £1,000,000 10% Over £350,000 4.5%    
Over £1,000,000 12%        

It is hoped that the decision to exempt residential properties with a value of up to £135,000 will encourage first-time buyers.  The steep increase in rates to 10% and 12% for more valuable properties has taken some by surprise.  A purchaser of a £1m property, for example, will pay £77,300 in LBTT, compared with £50,000 under the current SDLT regime.

This new tax will be collected by the Registers of Scotland, working in conjunction with Revenue Scotland, the new Scottish tax authority. 

Transitional rules will apply to contracts entered into from 1 May 2012 on.

For further information please contact Katharine Arthur, Head of Tax.