Changes to the Land and Buildings Transaction Tax (LBTT)

Author: Mitchells Roberton
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With effect from the 25 January 2019 certain changes in the rates and thresholds of LBTT took place. These apply to:

  • Transactions where Additional Dwelling Supplement (ADS) is payable
  • Non residential property transactions where a lump sum changes hands ( e.g. a purchase or a lease of commercial property where a premium is paid)

If missives were concluded prior to the 12 December 2018 the old rates will apply. There is no change to the LBTT paid on residential property transactions where no ADS is payable.

The main change for many people is a rise in ADS from 3% to 4% delivering a blow for landlords and holiday home buyers.  An additional dwelling is where a residential property is bought by someone who (or whose spouse, cohabitating partner or child under the age of 16) already owns a dwelling except as a replacement for the buyer’s owned main residence. This means that ADS will be charged at 4% of the total purchase price of the dwelling on top of the LBTT chargeable at the applicable rate. The Scottish Government says the increase to the surcharge is an important drive to support first-time buyers and assist people as they move up the property ladder. It was forecasted that the tax revenue raised from increasing the rate of ADS will be £2.3m in 2018/19 rising to £25.4m in 2019/20.

As regards non-residential property transactions legislation has been introduced that as from 25 January 2019 the lower rate of non-residential LBTT will be reduced from 3% to 1% and the upper rate will be increased from 4.5% to 5% and the starting threshold of the upper rate will be reduced so that it applies to transactions from above £250,000 instead of £350,000.

Non Residential LBTT
Purchase Price                       LBTT Rate
Not more than £150,000 0%
£150,001 to £250,000 1%
Over £250,000 5%


Also from 30 June 2018 all first time buyers in Scotland benefit from relief on LBTT. The relief effectively raises the zero tax threshold for first time buyers from £145,000 to £175,000. It is estimated that 80% of first-time buyers in Scotland will now pay no LBTT at all, while those buying a property for more than £175,000 will receive relief on the portion of the price below the threshold and benefit from savings of up to £600.

If I can help with any queries regarding LBTT please contact me Ross Leatham on 0141 552 3422 or by email

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