Have you submitted your LBTT return?

Land and Buildings Transaction Tax (LBTT) is a tax you may have to pay if you buy a property or land in Scotland.

If you purchase residential and non-residential property or land in Scotland, then you may be liable to Land and Buildings Transaction Tax (LBTT). LBTT is a self-assessed tax and it is the responsibility of the taxpayer to complete and submit a LBTT return.

In this blog we’ll cover general information about LBTT and give you details about how to submit an LBTT return.

What is Land and Buildings Transaction Tax?

LBTT is a building transaction tax - similar to Stamp Duty Land Tax (SDLT) in England and Northern Ireland and Land Transaction Tax (LTT) in Wales.

If you buy property or land above a certain value, then you will have to pay LBTT. The Scottish government set the rate of LBTT and it is administered and collected by Revenue Scotland.

What are the LBTT rates?

LBTT is a transaction tax, meaning LBTT rates are progressive and work on bandings depending on the value of the transaction. The tax is calculated on the part of the property purchase price falling within each band.

Residential LBTT rates 2024/25

Proportion of consideration in each band Rate

* For first-time buyers, the nil rate band ceiling is £175,000 due to the availability of a relief (see below).

For certain transactions, the Additional Dwelling Supplement may also apply at a flat 6% rate (see below).

Non-residential LBTT rates 2024/25

Proportion of consideration in each band Rate

LBTT for first-time buyers

If you are a first-time buyer and purchasing a property as your main residence you can get first-time buyer relief. You can claim the relief when you submit your LBTT return or in an amendment of that return.

There are certain criteria that a first-time buyer will need to meet to qualify for the first-time buyer relief. You can find the more details of the criteria on the Revenue Scotland website.

If you qualify for the relief, and you buy a property for less than £175,000 then you’ll be eligible for zero LBTT. For first-time buyers purchasing property over £175,000, you pay tax on the portion of the price above £175,000.

LBTT on second homes - Additional Dwellings Supplement (ADS)

People who buy additional residential properties will pay an extra 6% (this is called Additional Dwelling Supplement (ADS) on the total purchase price.

Examples of an additional residential property can include:

• a second home
• a rental property
• a holiday home
• properties used by family and friends even if you don’t charge rent

A share in a jointly owned property will only be counted if the value of the individual share is £40,000 or more.

When does the ADS apply?

You will pay ADS when:

• you buy a residential property and you own one or more residential properties anywhere in the world
• if there are two or more buyers: if any buyer already owns one or more residential properties anywhere in the world

and

• you are not replacing or selling your ‘only or main’ residence

When is an LBTT return required?

An LBTT return is requiredwithin 30 days after the date from which the variation takes effect.

If you fail to submit a LBTT return, Revenue Scotland might charge you penalties and interest.

How do I submit a LBTT return?

If you are submitting an LBTT yourself, then you will need to submit a paper return. If your solicitor or tax professional is doing the LBTT return on your behalf, then can register and submit the return online.

LBTT for commercial landlords

Whilst LBTT is largely a tenant consideration, landlords should be familiar with LBTT requirements.

LBTT may apply to anyone leasing non-residential land or property in Scotland. Where a notifiable lease has been granted, an LBTT return must be submitted by the tenant. LBTT is charged on both the rent and any non-rent consideration e.g. a premium paid by the tenant to the landlord.

Find out more about LBTT on lease transactions by visiting the Revenue Scotland website.

Summary

Understanding LBTT and who should pay it can be complex, so we recommend you seek advice from qualified tax advisors such as dns accountants. For more help and advice on LBTT returns and rates, call us on 03300 886 686 or email on enquiry@dnsaccountants.co.uk.

About the author

Siddharth Agarwal
I am a Chartered Tax Advisor (OMB) and ACCA. I have 9+ years of experience in owner-managed business taxation issues, company reorganisations, property taxation, and succession planning. I also work with private clients on bespoke tax planning strategies for trusts, residence status, and non-residents. I aim to fulfil my professional duties towards my clients and keep them satisfied, my utmost priority. I believe in establishing and maintaining businesses and personal relationships as the key to mutual growth.