John Swinney MSP, the Scottish Finance Secretary, announced the draft rates at which the new Land and Buildings Transaction Tax ("LBTT") will be charged on Scottish property transactions when it is introduced on 1st April 2015. LBTT will replace Stamp Duty Land Tax ("SDLT") in Scotland.
As expected, the tax will have a progressive banding system (similar to income tax, as opposed to SDLT which is a slab tax applying one rate of tax to the whole consideration above a certain value). Under the draft rates, LBTT will include a nil rate band and broadly sees those residential property transactions with a value above approximately £324, 250 being taxed more under LBTT.
Draft bands as follows:
|
Consideration |
LBTT |
|
Residential |
|
|
Up to £135,000 (£125,000 under SDLT) £135,000 - £250,000 £250,000 - £1,000,000 Greater than £1 million |
0% 2% 10% 12% |
|
Non–residential |
|
|
Up to £150,000 £150,000 - £350,000 Greater than £350,000 |
0% 3% 4.5% |
|
Non-residential Leases |
|
|
Net present value of rent up to £150,000 Net present value of rent over £150,000 |
0% 1% |
|
Premium up to £150,000 |
0% |
|
Premium £150,000 - £350,000 |
3% |
|
Premium greater than £350,000 |
4.5% |
The framework of LBTT will be similar to SDLT, with similar exemptions and reliefs available.
Anyone thinking of buying Scottish property should consider if they will pay more or less tax if the transaction is completed (for LBTT purposes) before 1st April 2015.
A Residential Property Purchase Budget calculator has been made available here >>