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Posted on: Wednesday, July 15, 2020
As of 15 July, the Scottish government is cutting the rate of its devolved Land and Buildings Transaction Tax (LBTT), with the threshold increasing from £145,000 to £250,000 until 31 March 2021.
There will be no LBTT paid on homes up to £250,000, 5% on homes priced from £250,001 to £325,000, 10% on homes from £325,001 to £750,000 and 12% on homes over £750,000. This will mean that residential property transactions, where the purchase price is under £250,000, and to which the Additional Dwelling Supplement (ADS) does not apply, will attract no LBTT.
Visit gov.scot for more information
For transactions where the purchase price is above £250,000, the rates and thresholds that usually apply to the proportion of the purchase price above that amount remain unchanged.
According to the legislation introduced to the Scottish Parliament, the revised rates and bands will apply to all relevant transactions where the effective date is between 15 July 2020 and 31 March 2021, inclusive of these dates.
Guild Member, Alyson Lowe from Alexander Taylor in Scotland, says the change is good news for the Scottish property market: “Finally, the Scottish Government have given us a precious gift of raising the LBTT figure from £145,000 to £250,000. This is massive to the economic growth of the country and particularly the property sector. A huge 80% of transactions in Scotland are under £250,000, which means the change will have a significant impact to market and buyers moving forward. The jump from £145,000 to £250,000 means around 34% more transactions will no longer pay LBTT.”
In April 2015, LBTT replaced Stamp Duty Land Tax (SDLT) in Scotland. While the Scottish government faced some criticism over its delayed reaction to the earlier announcement of the changes to SDLT In England and Northern Ireland earlier this month, changes are now welcomed by the sector with open arms.
ADS is an additional amount of LBTT payable on the purchase of a second residence in Scotland. Where the ADS does apply, the change to the starting threshold will also apply to such transactions. This means that a residential property transaction that is liable to the ADS will not pay the standard rates of LBTT on the first £250,000 of the purchase price, however, the ADS will remain payable at 4% of the total purchase price.
“What a time we have all come through, we will forever remember 2020 as the year where our very existence has changed beyond anyone’s predictions. Hopefully, this encouraging announcement about LBTT will ignite the Scottish property market and will help a lot of people make a positive change this year,” Lowe concludes.
Are you looking to buy property in Scotland to benefit from the new LBTT rates? Find out how much LBTT you’ll have to pay using our online calculator.
