Land And Buildings Transaction Tax Rates - No Change

10th December 2021

Land and Buildings Transaction Tax (LBTT) is a tax applied to residential and non-residential land and buildings transactions (including commercial leases) where a chargeable interest is acquired. The Additional Dwelling Supplement (ADS) is payable, as part of LBTT, on purchases of all relevant residential properties for £40,000 and above.

Policy
We will maintain residential rates and bands at their current level. This preserves our progressive system, delivers certainty and stability for taxpayers and is consistent with the commitment we made in the Programme for Government 2021-22.

The First-Time Buyer Relief will also continue to be available. This has the effect of increasing the nil rate band from £145,000 to £175,000 for first-time buyers.

We will maintain current non-residential LBTT rates and bands, which remain broadly competitive in a UK context, and again offers certainty and stability for taxpayers.

Additional Dwelling Supplement (ADS)
The ADS will continue to be charged at 4% in 2022-23.

Following the commitment in the Programme for Government 2021-22 to undertake a review, the Scottish Government will shortly launch a call for evidence and views on the ADS.

The review will not consider whether the ADS should continue, its overall impact or the specific rate at which it should be charged. Rather, our focus will be on the operation of the ADS. As a first step, we will seek views in order to build a clear and shared understanding of stakeholder and taxpayer concerns, develop a stronger evidence base on the need for change and identify any propositions for legislative change.

Rates and Bands
Rates and bands in 2022-23 will remain as follows:

Table 2.03: LBTT Rates and Bands for Residential Conveyances
Band Relevant Consideration Rate
Nil rate band Not more than £145,000 0%
First tax band More than £145,000 but not more than £250,000 2%
Second tax band More than £250,000 but not more than £325,000 5%
Third tax band More than £325,000 but not more than £750,000 10%
Fourth tax band More than £750,000 12%
The ADS rate of 4% applies to the total price of the property for all relevant transactions of £40,000 or more, and will be charged in addition to the rates set out in Table 2.03.

Table 2.04: LBTT Rates and Bands for Non-Residential Conveyances
Band Relevant Consideration Rate
Nil rate band Up to £150,000 0%
First tax band Above £150,000 to £250,000 1%
Second tax band Above £250,000 5%
Table 2.05: LBTT Rates and Bands for Non-Residential Leases
Band Net present value of rent payable Rate
Nil rate band Up to £150,000 0%
First tax band Above £150,000 to £2m 1%
Second tax band Above £2m 2%
Forecast
The forecasts for Land and Buildings Transaction Tax revenues are set out in Table 2.06.

Table 2.06: LBTT Revenue Forecasts 2021-22 to 2026-27
£ million 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27
Land and Buildings Transaction Tax 720 749 796 839 881 924
of which:
Residential transactions (excl. ADS) 380 390 420 451 480 510
Additional Dwelling Supplement (ADS) 125 133 141 145 148 152
Non-residential transactions 215 226 235 243 253 262