As we have discussed in recent blogs, 1st April marks the first day of the new Land and Buildings Transaction Tax (LBTT) coming in to force in Scotland. LBTT replaces Stamp Duty Land Tax (SDLT) on the purchase of property in Scotland.
SDLT remains in force for the rest of the UK.
The threshold for paying LBTT on residential property purchases has been set at £145,000 meaning no LBTT would be due on any purchase under this value. The threshold for SDLT is £125,000.
LBTT will have a progressive structure to bands and rates which is designed to ensure that taxpayers pay an amount more proportionate to the value of their property.
For residential property purchases, LBTT will be charged at 2 per cent of the purchase price between £145,000 and £250,000, 5 per cent between £250,001 and £325,000, 10 per cent between £325,001 and £750,000 and 12 per cent on sum paid above that.
By way of example, imagine you are purchasing a new home for £350,000.00. The tax liability under the LBTT and SDLT regimes would be markedly different:
Scottish LBTT Regime
First £145,000 @ 0% = £0
£145,000- £250,000 @ 2% (=£105,000 @ 2%) = £2,100
£250,000- £325,000 @ 5% (=£75,000@ 5%) = £3,750
£325,000- £350,000 @ 10% (=£25,000 @10%) = £2,500
TOTAL LBTT LIABILITY = £8,350
UK SDLT Regime
First £125,000 @ 0% = £0
£125,000- £250,000 @ 2% (=£125,000 @ 2%) = £2,500
£250,000- £350,000 @ 5% (=£100,000 @ 5%) = £5,000
TOTAL SDLT LIABILITY = £7,500
For more information or advice on land and building transaction tax, or any other property transaction, please don't hesitate to get in touch with our team. 
