Land and Buildings Transaction Tax is Scotland’s tax on property purchases and lease transactions, and it replaced Stamp Duty Land Tax for all Scottish property deals from 1 April 2015.1Revenue Scotland. LBTT Legislation Guidance It is administered by Revenue Scotland under the Land and Buildings Transaction Tax (Scotland) Act 2013, and it uses a progressive structure: each slice of the price sits in a different band and is taxed at that band’s rate.2Legislation.gov.uk. Land and Buildings Transaction Tax (Scotland) Act 2013 The buyer pays, regardless of where they live or where their business is registered, and the Scottish Budget 2026 to 2027 confirmed that all rates and bands remain unchanged.3Scottish Government. Land and Buildings Transaction Tax
What You Pay When Buying a Home
For a home, LBTT is charged in slices. Nothing is paid on the price up to £145,000; each pound above that falls into a higher band as the price climbs.4Revenue Scotland. Residential Property
- Up to £145,000: 0%
- £145,001 to £250,000: 2%
- £250,001 to £325,000: 5%
- £325,001 to £750,000: 10%
- Above £750,000: 12%
On a £300,000 house, you pay nothing on the first £145,000, then 2% on the next £105,000 (£2,100), then 5% on the remaining £50,000 (£2,500). The bill comes to £4,600.
First-time buyers get a higher nil rate band of £175,000, saving up to £600. The relief is applied on the return, and every buyer in the transaction must be a first-time buyer for it to work.4Revenue Scotland. Residential Property
The 6% Additional Dwelling Supplement
Buying a second home or a buy-to-let brings a separate charge on top of the standard LBTT. The Additional Dwelling Supplement is 6% of the entire purchase price, not just the slice above a threshold, and it applies on any purchase of £40,000 or more where the buyer ends the day of purchase owning two or more dwellings and is not replacing their only or main home.5Revenue Scotland. The Additional Dwelling Supplement (ADS) A £250,000 buy-to-let attracts £15,000 of ADS on top of the ordinary residential LBTT.
Companies and discretionary trusts pay the ADS on almost all residential purchases, whether or not they already own other properties.6Revenue Scotland. ADS Rules for Particular Transactions and Buyers
If you are selling your old home to buy a new one, timing controls the outcome. Sell first, buy within 36 months, and no ADS is due. Buy first, sell the old home within 36 months afterward, and you can reclaim the ADS you paid. The 36-month window applies to transactions with an effective date on or after 1 April 2024; earlier transactions used an 18-month limit.5Revenue Scotland. The Additional Dwelling Supplement (ADS)
Commercial Property and Leases
Shops, offices, farmland, and mixed-use property such as a flat above a shop are taxed under the non-residential bands, which are lower than the residential ones:7Revenue Scotland. Non-Residential Property
- Up to £150,000: 0%
- £150,001 to £250,000: 1%
- Above £250,000: 5%
Buying six or more residential properties in a single transaction is treated as non-residential, so the ADS does not apply.
Non-residential leases carry two tax elements. Any upfront premium is taxed under the bands above. The rent is converted to a Net Present Value using a 3.5% discount rate set in legislation, and that NPV is then taxed at 0% up to £150,000, 1% between £150,001 and £2,000,000, and 2% above £2,000,000.8Revenue Scotland. LBTT6005 – Calculation of Tax Chargeable on a Lease Transaction
The Three-Yearly Lease Return Nobody Warns You About
Commercial tenants often miss this. If you hold a non-residential lease that was notifiable for LBTT, you must file a further return with Revenue Scotland every three years from the lease’s effective date, and you have to file it even if the rent has not changed and no more tax is due.9Revenue Scotland. LBTT6007 – Three Yearly Review of the Tax Chargeable The tax on each review is worked out using the rates that were in force when the lease started, not the rates at the review date. The deadline is 30 days after each three-year anniversary, and the same late-filing penalties as for purchase returns apply.
Assigning a lease to a new tenant does not reset the clock. The incoming tenant inherits the cycle and files on the original anniversary dates.10Revenue Scotland. Assignation of a Lease
Reliefs That Can Reduce the Bill
Several reliefs cut or remove an LBTT charge. Most have to be claimed on the return.
Multiple Dwellings Relief. When two or more dwellings are bought in a single transaction, tax is worked out on the average price per dwelling rather than the combined total, subject to a floor of 25% of what would otherwise have been due.11Revenue Scotland. Calculating Multiple Dwellings Relief The ADS is calculated separately on each applicable dwelling.
Group Relief. Transfers of property between companies in the same group can be fully relieved. Two companies are in the same group where one owns at least 75% of the other, or a third company owns at least 75% of both.12Revenue Scotland. Group Relief The relief is blocked where arrangements exist for the buyer to leave the group, where consideration comes from outside the group, or where the main purpose is tax avoidance.
Charities Relief. Charities can claim relief under Schedule 13 of the 2013 Act where the property will be used for charitable purposes, and the relief covers a charity’s share when it buys as one of several co-owners.
Sub-Sale Development Relief. A buyer who contracts to buy land and then sells it on before completion can claim relief where the sub-sale involves significant commercial development expected to complete within five years. If the development does not happen in that window, the relief is clawed back and a further return with the tax due must be filed within 30 days.13Revenue Scotland. LBTT3044 – Sub-Sale Development Relief
Filing the Return and Paying the Tax
You have 30 days from the effective date of the transaction (normally the day you complete and get the keys) to file the return and pay the tax.14Revenue Scotland. LBTT4015 – LBTT Return or Further LBTT Return in Consequence of a Later Linked Transaction Returns go through the Scottish Electronic Tax System, Revenue Scotland’s online portal, and payment can be made by BACS or CHAPS. Once the return and payment are in, Revenue Scotland issues a confirmation notice. That notice matters: the Registers of Scotland will not register the change of ownership without it.
In practice, your solicitor handles the return. Where you want a solicitor or agent to deal with Revenue Scotland on your behalf, each buyer signs an “Authority to act” form, which stays in place until you revoke it.15Revenue Scotland. Authority to Act With Revenue Scotland
Penalties and Interest for Filing Late
Missing the 30-day deadline triggers an automatic £100 penalty, and the charges grow from there:16Revenue Scotland. RSTP3006 – Penalties for Failing to Make LBTT Return on Time
- More than 3 months late: an additional £10 per day for up to 90 days
- More than 6 months late: a further penalty of £300 or 5% of the unpaid tax, whichever is greater
- More than 12 months late: another £300 or 5% of the unpaid tax, whichever is greater, rising to 100% of the unpaid tax where Revenue Scotland determines the failure was a deliberate attempt to withhold information
Interest is charged on top of penalties. Revenue Scotland applies simple interest at the Bank of England base rate plus 2.5% on any unpaid tax, running from the original filing date until the tax is paid.17Revenue Scotland. RSTP4002 – Interest on Late Payment of Tax A return that lands three months and one day late on a £10,000 tax bill already carries the £100 fixed penalty plus the first day of the daily accrual, with further daily charges continuing to build.