[Updated] Changes to Scottish LBTT
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In response to the UK government’s changes to stamp duty (increasing the threshold to £500,000), the Scottish Government has announced LBTT (Land and Buildings Transaction Tax) will also have the threshold increased (to £250,000).
On announcement on Thursday the 9th, there was no defined date for the implementation. As of Friday the 10th of July, a date of implementation has now been set by the Scottish Government. Wednesday the 15th of July.
LBTT Threshold Changes
LBTT (Land and Buildings Transaction Tax) thresholds in Scotland will change as follows:
Up to £145,000 = 0% Unchanged
£145,001 - £250,000 = 2% Old Rate to 0% New Rate
£250,001 - £325,000 = 5% Unchanged
£325,001 - £750,000 = 10% Unchanged
Over £750,000 = 12% Unchanged
This means you won’t pay LBTT on properties valued up to £250,000. The LBTT you will owe on a property valued over £250,000 will be cut by £2,100 (since you no won’t be paying 2% on the amount between £145,001 - £250,000.
When Will This Change Be Implemented?
When first announced, there was no implementation date. Now, there is one.
According to ScotGov, the threshold will rise to the new, temporary, rate on Wednesday the 15th of July.
Since LBTT is not calculated until the effective date of the property transaction (see details below), this will give the vast majority of buyers certainty around the amount they will pay.
When Is LBTT Calculated And Owed
LBTT payment is currently due within 30 days of the day after the effective date of the property transaction (date of entry).
LBTT is calculated and paid at the same time (usually within a few days of the settlement date).
How Long Will The LBTT Rate Cut Apply For?
When originally announced, we didn’t have an answer to this. Now, we do. According to the Scottish Government, The LBTT cut will be temporary and will remain in place until the 31st of March, 2021.
Stamp Duty in England and NI will return to the original rate thresholds on the same date.
What If You're Buying An Additonal Property?
As of January the 29th, 2019, an Additional Dwelling Supplement (ADS) of 4% has been charged on additional properties.
To calculate this, you would normally add 4% on to each LBTT band. In Scotland, this only applies if the additional property is priced at £40,000 or more
The 4% ADS will remain in place.
In England and Northern Ireland, additional dwellings are charged at 3% on top of base rates.
If you’re buying a new home before selling the former, you will have to pay ADS initially but you can reclaim it if you sell your former home within 18 months (3 years in England).
How Will This Affect Scottish First Time Buyers?
Under original (old) LBTT rates Scottish First Time Buyers have a higher initial threshold of £175,000 compared to £145,000. Therefore, on any property purchase £175,000 and above, first time buyers would save £600 in LBTT.
The new, LBTT rates, in place from Wednesday the 15th of July until the 31st of March 2021, will apply to all buyers, including first time buyers.
The temporary changes to stamp duty in England and NI also raise everyone’s threshold to £500,000, including first time buyers.
What are your thoughts on the changes to LBTT? Let me know in the comments down below.
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