Nil Rate Band

Nil Rate Band

Finance Secretary Kate Forbes announced on 10 July 2020 that a temporary increase in the nil rate band for LBTT residential property transactions from £145,000 to £250,000 will be introduced with effect from Wednesday 15 July 2020 and remain in place until 31 March 2021..

 Purchase price

LBTT rate

 Up to £250,000

0%

 Above £250,000 to £325,000

5%

 Above £325,000 to £750,000

10%

 Over £750,000

12%

The revised rates and bands will only apply to transactions with an effective date on or after 15 July 2020.

Residential transactions for consideration of £40,000 or more will still require to be notified to Revenue Scotland even if no tax is due.

Rates for the Additional Dwelling Supplement (ADS) and non-residential LBTT remain unchanged.

If you have any questions, please contact Revenue Scotland by email: lbtt@revenue.scot

FAQs

Q: My transaction is about to complete, what should I do? Should I delay? Should I renegotiate the date of entry / effective date?

A: Speak to your adviser who will give you the advice you need for your transaction. Revenue Scotland cannot give advice about your circumstances.

Q: Are changes to the residential LBTT rates and bands permanent??

A: No. This increase in the LBTT nil rate band is temporary. The change will run until 31 March 2021.

Q: If I pay the tax now can I reclaim it later?

A: The application of the new rates and bands will be determined by the ‘effective date’ of your transaction. If the ‘effective date’ is before the date the legislation comes into force, the ‘old’ rates and bands will apply.
Legislation will be introduced with effect from Wednesday 15 July, 2020.
The revised rates and bands will only apply to transactions with an effective date on or after 15 July 2020.
Rates for the Additional Dwelling Supplement (ADS) and non-residential LBTT remain unchanged.

Q: Will the changes apply to any transactions that took place before the date the legislation is introduced?

A: No – The revised rates and bands will only apply to transactions with an effective date on or after 15 July 2020.

Q: If I don’t have to pay any tax as a result of these changes, do I still have to submit a tax return?

A: Yes. Residential transactions for consideration of £40,000 or more will still require to be notified to Revenue Scotland even if no tax is due.

Q: If this is the purchase of my second home do I pay no tax at all?

A: Additional Dwelling Supplement (ADS) will still be due on the purchase of second homes.
The changes in tax rates and bands, once introduced, will not apply to Additional Dwelling Supplement (ADS).
Rates for the Additional Dwelling Supplement (ADS) and non-residential LBTT remain unchanged.

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