In England and Northern Ireland, buyers are currently under pressure to move before April 2025 to avoid paying more in Stamp Duty Land Tax (SDTL), their version of Land and Buildings Transaction Tax (LBTT).
While there has not been an update on Land and Buildings Transaction Tax changing in Scotland, there has been a recent change to what is called the Additional Dwelling Supplement (ADS), from 6% to 8%, for owners of more than one property. More on this below.
What is Land and Buildings Transaction Tax (LBTT)?
LBTT is a mandatory tax that is applied when purchasing a property or land in Scotland.
Depending on your previous homeownership record, you'll be subject to a varying amount of LBTT.
For example, first time buyers can expect to pay more in LBTT than someone purchasing a property to let.
What is the Additional Dwelling Supplement (ADS)?
The Additional Dwelling Supplement is an extra charge applied on top of any Land and Buildings Transaction Tax owed. It is applicable when purchasing residential property in Scotland.
Examples include:
- A second home
- A rental property
- A holiday home
- Properties used by family and friends, even if no rent is charged
ADS is chargeable when you buy residential property in Scotland and you already own more than one residential property anywhere in the world and you are not replacing or selling your own main residence.
A property is only countable if your share value is £40,000 or more.
How much LBTT do first time buyers pay?
Right now, if you're a first time buyer and you're purchasing a property in Scotland, you'd pay 0% in LBTT on the first £145,000, then it's 2% on £145,001 to £250,000, 5% on £250,001 to £325,000, 10% on £325,001 to £750,000, and 12% above £750,000.
For example:
- Purchase price: £350,000
- LBTT for first time buyers: £7,750 (includes £600 first time buyer relief)
What if I'm moving home?
If you already own a property and are going to be moving home, you don't have to pay anything in LBTT on the first £145,000; then it's 2% on £145,001 to £250,000, 5% on £250,001 to £325,000, 10% on £325,001 to £750,000, and 12% above £750,000.
For example:
- Purchase price: £350,000
- LBTT for home movers: £8,350
I own multiple properties already; how much LBTT and ADS will I have to pay?
The Land and Buildings Transaction Tax (LBTT) is a tax levied on the purchase of property or land in Scotland. If you already own a property, you may need to pay the Additional Dwelling Supplement (ADS) when buying another property. The ADS rate is currently set at 8% of the total purchase price.
You'll need to pay 0% in LBTT on the first £145,000, then it's 2% on £145,001 to £250,000, 5% on £250,001 to £325,000, 10% on £325,001 to £750,000, and 12% above £750,000.
For example:
- Purchase price: £350,000
- LBTT = £8,350
- 8% ADS = £24,800 (after 5 December 2024)
- LBTT plus ADS for investors/owners of more than one property = £33,150
Will LBTT be changing soon?
While Stamp Duty Land Tax (SDLT) is changing next year in England and Northern Ireland, LBTT will stay the same, and first time buyer relief will also remain in place.
To provide certainty to taxpayers, Land and Buildings Transaction Tax (LBTT) rates and bands will not be changing until 2026.
Therefore, you have more time to figure out your homeownership plans moving forward.
If you're in the market for a new home, why not book a FREE property valuation? You can discover your home's market value and get professional advice from our local valuation experts. Plus, there's no obligation to sell if you change your mind.
The Your Move Content Marketing Team
