LBTT in Scotland - How Property Taxes Shape Buyer Behaviour

11th January 2026

Buying a home is rarely a simple decision, and in Scotland, the Land and Buildings Transaction Tax (LBTT) adds another layer of complexity.

Introduced in 2015, LBTT replaced the UK-wide Stamp Duty Land Tax (SDLT) for residential property transactions in Scotland.

Unlike SDLT in England, LBTT has lower thresholds and steeper bands for higher-value properties, making it a significant consideration for anyone planning to move, upgrade, or invest in Scottish property.

The Cost of Moving: LBTT vs SDLT

At first glance, LBTT and SDLT operate in a similar progressive fashion: the more expensive the property, the higher the tax. However, the key differences lie in thresholds and rates.

In Scotland, the 0% band ends at £145,000, compared with £250,000 in England, while the 10% band applies from £325,001 upwards. For mid- to high-value properties, LBTT can nearly double the tax burden compared with England.

This creates a tangible upfront cost that can affect decisions about whether and when to move, particularly for families and first-time buyers who need to budget carefully for deposits and transaction costs. For some, the difference of several thousand pounds is the deciding factor in whether to go ahead with a purchase.

Evidence That LBTT Influences Buyer Decisions

Surveys of Scottish buyers provide some insight. A recent McEwan Fraser Legal survey found that over a third of potential buyers had postponed or abandoned moving because of LBTT. Of those, more than half said LBTT influenced their decision, and nearly 40% cited it as the primary reason for holding off. Buyers described the tax as "unfair" or "unexpectedly high," highlighting how perceptions of affordability and fairness affect behaviour.

Market commentary also reflects similar trends. When LBTT was first introduced, high-value transactions experienced short-term slowdowns, as buyers adjusted to higher rates and factored tax into their budgets. Although the market eventually adapted, the pattern illustrates that tax rates can have a real behavioural effect, especially for high-cost properties.

Broader Market Effects

Despite these individual deterrent effects, the overall Scottish housing market remains active, and LBTT continues to generate substantial revenue. Official data show that most transactions are above the LBTT threshold, meaning the tax is widely paid. Nevertheless, the behavioural effects are most pronounced among potential buyers at the margins — those deciding whether to stretch to a higher-value property or move at all.

Anecdotal evidence from property forums and finance discussions reinforces this picture. Many buyers report that LBTT makes them reconsider moving, either delaying purchases or opting for lower-cost homes. While not scientific, these accounts provide a window into how taxation affects household decision-making.

Conclusion: LBTT Shapes Decisions Without Stopping the Market

The evidence suggests that LBTT does influence buyer behaviour, particularly at higher property values and for cautious first-time movers. While it does not halt transactions or collapse the housing market, it adds an upfront cost that some buyers find prohibitive, affecting timing, property choice, and affordability considerations.

Ultimately, LBTT illustrates a broader principle: taxation is not only about raising revenue — it also sends signals to the market and can shape behaviour. For buyers in Scotland, understanding the impact of LBTT is crucial for financial planning, while policymakers must balance revenue needs with the potential to deter household mobility.

Scotland LBTT (2026)

£0-£145k: 0%
£145k–£250k: 2%
£250k–£325k: 5%
£325k–£750k: 10%
Above £750k: 12%

England SDLT (2026)
£0–£125k: 0%
£125k–£250k: 2%
£250k–£925k: 5%
£925k–£1.5m: 10%
Above £1.5m: 12%