Land and Buildings Transaction Tax (LBTT) | NatWest



Our guide to the Land and Building Transaction Tax

From April 1st 2015, property transactions in Scotland will be subject to the new Land and Buildings Transaction Tax (LBTT). The new tax will be applied to transactions in Scotland alone, and will replace the existing Stamp Duty Land Tax.

How it Works

The LBTT will operate a banded, progressive system, meaning each tax band is only charged on the value of the property over a certain threshold.

The Land and Buildings Transaction Tax rates for Residential properties are:

Property Price
LBTT Rate
Up to £145,000 0%
£145,000 - £250,000 2%
£250,000.01 - £325,000 5%
£325,000.01 - £750,000 10%
Over £750,000 12%

The new system means that the different rates of tax only apply to certain amounts of the value of the property. If your property costs £200,000, the 2% would only be charged on the £55,000 over the £145,000 threshold.

Have a look at an example...

House Price = £280,000
£145,000 @ 0% tax = £0
£105,000 @ 2% tax = £2,100
£30,000 @ 5% tax = £1,500
Total payable = £3,600

The LBTT will be levied and administered by Revenue Scotland.

Why a new system has been introduced

The new Land and Buildings Transaction Tax was introduced with the intention to create a fairer tax system. Currently, if the cost of your property falls just above a threshold, you will pay significantly more tax than if it falls just below a threshold. For the majority of home buyers, the LBTT will mean they save money.

It is also intended to prevent 'slab' like property sales patterns. As tax was levied at one rate on the entire property value in the old system of Stamp Duty Land Tax, property prices would 'bunch' just below a Stamp Duty threshold. Instead, the new LBTT laws will operate a progressive tax rate structure, similar to that of income tax, intended to prevent this bunch as the effect of going over a threshold will be much less significant.

Add your signposting title here… Buying a house in England or Wales?

When you buy a property or land in England and Wales, you have to pay Stamp Duty if the cost is over £125,000. The amount you need to pay depends on the purchase price of the house. It's higher for more expensive properties rising to 12% for homes costing more than £1.5million.

Find out more about Stamp Duty
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