Land and Buildings Transaction Tax (LBTT) First-Time Buyer Tax Relief Introduced in Scotland

Land and Buildings Transaction Tax (LBTT) First-Time Buyer Tax Relief Introduced in Scotland

New tax relief for first-time property buyers came into effect in Scotland from 30 June 2018. The threshold for Land and Buildings Transaction Tax ( LBTT) (the Scottish version of Stamp Duty) is now £175,000 rather than £145,000. However, first-time buyers of properties over £175,000 also benefit from the relief.

LBTT Savings – Examples

Here’s a breakdown on the LBTT saving for a first-time buyer:

  • Up to and including £145,000 – No saving. Nobody pays LBTT up to £145,000;
  • Between £145,001 and £175,000 – Discount of up to £600. In other words, whatever the LBTT would have been (somewhere between £1 at least and £600 at most), you don’t have to pay it;
  • Over £175,000 –  A discount of £600 on your LBTT. In other words, even if you are buying a £400,000 property, you simply calculate the normal LBTT payable and subtract £600.  

If a couple or a group of people are buying a property, all of the buyers have to be first-time buyers.

According to the Scottish Government, around 80% of first-time buyers will pay no tax as a result of LBTT first-time buyer relief and around 12,000 first-time buyers will benefit every year.

What is LBTT vs Stamp Duty

Stamp Duty on the purchase of residential properties was replaced in Scotland by Land and Buildings Transaction Tax (LBTT) on 1 April 2015. For the majority of people in Scotland, the change from Stamp Duty to LBTT was welcome as it reduced the amount of tax that they paid on residential property purchases versus the previous tax regime. However, for homes worth more than £333,000, the amount payable under the LBTT regime is higher than it was under Stamp Duty. Any negative effect has therefore been disproportionately felt in higher value areas of Scotland like Edinburgh and the Lothians where a larger than average proportion of residential family homes fall within this price bracket.

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Additional Dwelling Supplement (ADS)

From 1 April 2016, an Additional Dwelling Supplement (ADS) was introduced for people buying an additional residential property, over and above their main home. For more information about ADS and whether it might apply to your purchase, read our article explaining ADS and Land and Buildings Transaction Tax (LBTT).

Calculate Your Costs

If you’re thinking of buying a home or investment property, our LBTT Calculator will help you to calculate what the LBTT tax would be on properties in Scotland, based on the purchase price.

You can also use our instant Purchase Conveyancing Quote page to find out all of the costs of purchasing, including fees and sums payable to other parties such as Revenue Scotland. Whilst this estimate is as accurate as possible, your individual circumstances or property features may mean that additional fees or charges apply. We will provide you with a full purchasing quote and Terms of Business before doing any work for you.

If you have any questions, please don’t hesitate to get in touch with our Conveyancing Team by calling 0131 297 7999 or by emailing [email protected] and we’ll happily talk you through the process of buying and selling. 

For more information about MOV8 Real Estate’s conveyancing services and how we can help you with your home purchase or sale, go to https://www.mov8realestate.com/conveyancing/.

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I'm Robert Carroll, Managing Director of MOV8 Real Estate, Estate Agents and Solicitors. MOV8 is an innovative and forward-thinking, all-in-one estate agency and solicitor firm with its Head Office in Edinburgh and a City Centre office in Glasgow. We buy and sell literally thousands of properties for property buyers and sellers in Scotland every year, so I see first-hand every day what is actually happening in the property market. This blog aims to give an honest, fresh and sometimes light-hearted take on what is happening in the Scottish property market.

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