Understanding LBTT (Stamp Duty) - Urban Union Ltd

Understanding LBTT

If you’re purchasing a first home, knowing what you need to pay in Stamp Duty – known as Land and Buildings Transaction Tax here in Scotland – can be confusing.

Land and Buildings Transaction Tax works the way as Stamp Duty Land Tax which is payable in England and Northern Ireland. The percentage charge increases with the price paid for the property with threshold amounts in place.

The current rates were introduced in April 2015 and the payment is linked to house price property bands. Depending on the price you pay, you’ll pay a percentage of the purchase price.

Here in Scotland, rates are different to those in the rest of the UK and the rates vary depending on whether it’s a main home, buy-to-let property or second home.

You won’t pay any tax on the first £145,000 of the price of your main property. Over that price, tax is charged at 2, 5, 10 and 12% of the remaining purchase price up to £750,000. So, if you are buying a property under £145,000 you won’t pay any LBTT. Over that, you will pay:

  • 0% on the first £145,000
  • 2% on the next £105,000 (Above £145,000 to £250,000)
  • 5% on the next £75,000 (Above £250,000 to £325,000)
  • 10% on the remaining £175,000 (Above £325,000 to £750,000)

If you already own a property and you are buying a second home or buy-to-let investment you will have an additional payment of 4% applied on each band above the initial tax free threshold of just £40,000. Where your additional property costs between £40,000 and £145,000, 4% will be charged on the full purchase price.

If you’re a first-time-buyer you’ll will receive a special rate in order to help you get onto the property market. In this instance, the 0% threshold applies to the property up to £175k of the purchase price, as the Scottish government is aware that the majority of properties for this type of buyer would cost less than this.

The rest of the tax percentages and property bands are the same as for home movers. Therefore, if you’re buying your first house and it costs £200,000, then you’ll pay:

• 0% on the first £175,000

• 2% on the remaining £25,000

If you are looking for your first home, talk to us at Urban Union. We have many options for first-time-buyers in Perth, Glasgow and Edinburgh. See our developments.