Land and Buildings Transaction Tax
Overview
Land and Buildings Transaction Tax (LBTT) is a charge on land transactions in Scotland. Land transactions must be notified to Revenue Scotland, unless the chargeable consideration (definition below) is less than £40,000, or the transaction is otherwise exempt.
The Additional Dwelling Supplement (ADS) is an additional charge which applies when the taxpayer is purchasing an additional property and not replacing their main residence. ADS most commonly arises for purchases of a second home or a buy-to-let dwelling.
Chargeable Consideration is defined as anything given in money or money’s worth for the subject-matter of the transaction. For example, the chargeable consideration for a house will be the price paid for the property, land and fittings. For leases, chargeable consideration can include rent payable and any premium paid on the lease.
Table 1: Number of LBTT returns received by type of transaction and year, last 5 years
|
Year |
Residential conveyance |
Non-residential conveyance |
Lease |
Review of |
All |
|
2019/20 |
105,110 |
6,440 |
4,920 |
4,570 |
121,040 |
|
2020/21 |
96,850 |
5,930 |
3,500 |
2,900 |
109,170 |
|
2021/22 |
110,120 |
7,080 |
4,540 |
4,580 |
126,330 |
|
2022/23 |
102,580 |
7,050 |
4,620 |
4,710 |
118,950 |
|
2023/24 |
94,050 |
6,520 |
4,760 |
5,500 |
110,830 |
The total number of LBTT returns received in 2023/24 was 7% lower than in the previous year. This decrease was mainly driven by a reduction in residential conveyance returns, with residential conveyance returns being at a record low, down 8% on the previous year (consistent with the 8% decrease in residential property sales reported in the 2023/24 Property Market Report published by Registers of Scotland). Non-residential conveyance returns also down 8% from 2022/23.
There was an increase in both lease and lease review returns, with lease returns up 3% from the previous year and review returns being at a record high, 17% higher than the previous year. While this is a fairly large increase, it should be noted that the majority of lease review returns do not result in any additional tax being declared due.
Figure 1: LBTT including net ADS declared due, by year and transaction type
2023/24 saw the total LBTT declared due at £803.6 million. This is down 4% on the figure of £838.6 million recorded in 2022/23. This decrease was driven mainly by a decline in both residential LBTT excluding ADS (£422.1m) and non-residential LBTT excluding ADS (£157.6m), which fell by 9% and 16% respectively.
Since the introduction of ADS in April 2016, total residential LBTT revenue has typically been at least twice as high as non-residential LBTT. This remains true in 2023/24 with total residential LBTT (£606.8m) being around 3.7 times the figure for total non-residential LBTT (£162.1m).
Total Net ADS (£189.2m) made up 24% of total LBTT in 2023/24. It is important to note that this figure will be revised downwards in future publications as more reclaims of ADS are submitted relating to the 2023/24 period.
LBTT from leases totalled £34.2 million, up 31% from 2022/23.
Residential LBTT excluding ADS
LBTT rates and bands for residential transactions over time:
|
Purchase price |
01 April 2015 - 14 July 2020 |
15 July 2020 - 31 March 2021 |
01 April 2021 - Present |
|
Up to £145,000 |
0% |
0% |
0% |
|
£145,001 to £250,000 |
2% |
0% |
2% |
|
£250,001 to £325,000 |
5% |
5% |
5% |
|
£325,001 to £750,000 |
10% |
10% |
10% |
|
Over £750,000 |
12% |
12% |
12% |
Table 2: LBTT declared due, excluding ADS, and number of returns for residential conveyances
|
Year |
LBTT excluding ADS |
Annual percentage change in LBTT excluding ADS |
LBTT returns received |
Annual percentage change in LBTT returns received |
LBTT excluding ADS per return received (rounded to nearest £10) |
|
2019/20 |
287.1 |
10.0% |
105,110 |
1.3% |
2,730 |
|
2020/21 |
256.4 |
-10.6% |
96,850 |
-7.8% |
2,650 |
|
2021/22 |
416.5 |
62.3% |
110,120 |
13.7% |
3,780 |
|
2022/23 |
465.5 |
11.7% |
102,580 |
-6.8% |
4,540 |
|
2023/24 |
422.1 |
-9.3% |
94,050 |
-8.3% |
4,490 |
Residential LBTT declared due, excluding ADS, is down 9% from the record high of £465.5 million in 2022/23. The number of residential LBTT returns received was down 8% over the same period.
The average amount of LBTT paid per return for residential conveyances dropped slightly (1%) in 2023/24. The higher average over the last two years is driven by fewer transactions in the lowest tax bands and an increasing proportion in the two highest bands as a result of increased property prices.
Figure 2: Distribution of residential conveyance returns received by residential LBTT band and year
Figure 2 shows that the proportion of returns in all bands has been broadly stable between 2022/23 and 2023/24, with the largest change being an increase in the proportion of returns in the £145,001-£250,000 band of 0.4 percentage points in 2023/24.
Approximately 36% of returns received in 2023/24 had a total consideration of less than or equal to £145,000 and, therefore, are likely to have had zero tax liabilities1. This is the lowest proportion on record and reflects house prices rising, leaving fewer properties priced under £145,000 .
Figure 3 shows that LBTT revenue is dominated by the £325,000 to £750,000 band, which in both 2022/23 and 2023/24 contributed 60% of LBTT, while making up only 16% of returns. The highest band (£750,001 and above) accounts for 1% of returns received and 23% of tax.
Figure 3: Distribution of residential LBTT revenue, excluding ADS, by residential LBTT band and year
The distribution of residential LBTT revenue across the tax bands remained virtually unchanged between 2022/23 and 2023/24. With the breakdown for both years being roughly 6% in the £145k – £250k band, 11% in the £250k - £325k band, 60% in the £325k - £750k band and 23% in the £750k and above band.
The distribution in 2020/21 is anomalous due to a temporary change in the nil rate tax band which reduced tax liabilities in the second lowest (£145k – £250k) band and reduced gross tax liabilities for all other residential transactions by £2,100.
Figure 4: Distribution of numbers of residential conveyance transactions by total consideration and tax band 2023/24
Figure 4 shows a more detailed breakdown of the number of residential conveyance transactions by total consideration (e.g. house price) for returns submitted in 2023/24.
The majority of transactions are towards the lower end of the scale (approximately two-thirds are less than or equal to £240k), with the distribution then extending to a long tail of higher value transactions. Due to the smaller numbers of transactions at the higher value end, the width of the total consideration categories is increased at the points indicated on the chart.
Additional Dwelling Supplement
ADS rates over time:
|
Date of Transaction |
ADS rate |
|
For transactions on or after 16 December 2022 |
6% |
|
For transactions on or after 25 January 2019 and prior to 16 December 2022 |
4% |
|
For transactions prior to 25 January 2019 |
3% |
If a taxpayer buys a new main residence before selling their previous main residence, or if they are buying a second home or buy-to-let property, they will have to pay Additional Dwelling Supplement (ADS). In 2023/24, this payment can be reclaimed if the previous main residence is sold within 18 months, and the claim is made within 5 years of the submission date. From 1 April 2024, ADS can be reclaimed if the previous main residence is sold within 36 months.
A small amount of ADS applies to non-residential conveyances (£4.4m in 2023/24), but this section deals only with residential LBTT.
Table 3: Gross ADS reclaimed and number of ADS repayments claimed for residential LBTT returns by year
|
Year |
Gross ADS declared due (£Millions) |
ADS Reclaimed (£Millions) |
ADS Reclaimed (%) |
LBTT returns received with ADS declared due |
Repayments claimed |
Repayments claimed (%) |
|
2019/20 |
163.5 |
44.1 |
27.0% |
23,230 |
4,100 |
17.7% |
|
2020/21 |
153.8 |
43.8 |
28.5% |
20,790 |
3,820 |
18.4% |
|
2021/22 |
188.5 |
44.2 |
23.5% |
25,140 |
3,730 |
14.8% |
|
2022/23 |
206.3 |
51.2 |
24.8% |
24,650 |
3,690 |
15.0% |
|
2023/24 |
234.3 |
49.5 |
21.1% |
21,090 |
2,530 |
12.0% |