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% |
£234 million in gross residential ADS was declared due in 2023/24, an increase of £28 million (14%) on the previous year. This is a record high figure for ADS declared due despite the number of returns with ADS declared due being down 14% on the previous year. This reflects the ADS rate being at the higher rate of 6% for the full 2023/24 period, whereas in the 2022/23 financial year, the increase in ADS from 4% to 6% only occurred towards the end of Q3.
Around 12% of taxpayers who submitted residential LBTT returns with ADS declared due in 2023/24 have since claimed repayment of ADS, accounting for 21% of the gross ADS declared due.
The ADS reclaim rate for 2023/24 appears lower than previous years. This is because taxpayers have had less time to submit a repayment claim on more recent transactions, and the figure will increase over time as more claims for repayment are made. Only minimal revisions are expected to repayment claims relating to returns made up to 2021/22.
Though taxpayers have 18 months from the effective date of the transaction to sell their previous main residence in order to reclaim ADS (36 months, as of the 1 April 2024), the majority of claims for repayment are received much sooner. Taxpayers can submit a repayment claim up to five years after selling their previous residence.
Figure 5: Proportion of ADS reclaimed and reclaims received by time between submission of LBTT return and claim for repayment
Approximately 9% of ADS repayment claims are received within four weeks of the initial tax return being submitted. More than half of all claims are received within 20 weeks and approximately 85% of all claims are received within a year. The percentages are very similar for gross ADS reclaimed, as claims received and gross ADS reclaimed follow a near identical distribution.
Table 4: Number of residential LBTT returns received with ADS declared due and the proportion with a subsequent claim for repayment, by year and stated intention to reclaim
|
Notes: |
|
1. The data reflects claims for repayment of ADS received up to and including 31 May 2024 and will be revised over time as more claims for repayment of ADS are received, primarily for returns received in 2022/23 and 2023/24. |
For residential LBTT returns submitted with ADS declared due in 2023/24, around 81% of taxpayers stated they did not intend to reclaim ADS. This is slightly lower than the previous high set in the previous two financial years, with 84% of taxpayers stating they did not intend to reclaim ADS in both 2021/22 and 2022/23.
So far, 52% of taxpayers who said they intended to reclaim ADS incurred in 2023/24 have gone on to do so. This figure will likely rise to at least 70% as more reclaims are submitted over time.
Figure 6: Distribution of residential conveyances by type of transaction (ADS declared due and intends/does not intend to reclaim ADS) and residential LBTT band, 2023/24
Figure 6 shows that the proportion of conveyances in the lowest tax band is 1.7 times as high for returns where the taxpayer does not intend to reclaim ADS, compared to returns where they do intend to reclaim. This likely reflects the fact that these transactions will include buy-to-let properties and second homes. Higher value transactions make up a much higher proportion of returns where the taxpayer intends to reclaim ADS. This is likely to reflect a number of factors including the fact that these transactions will include taxpayers who may be moving up the property ladder as they intend to replace their previous main residence.
Non-residential conveyances
Non-residential rates and bands:
|
Purchase price |
01 April 2015 - 24 January 2019 |
25 January 2019 - Present |
|
Up to £150,000 |
0% |
0% |
|
£150,001 to £250,000 |
3% |
1% |
|
Above £250,000 |
5% |
5% |
Table 5: LBTT declared due, excluding ADS, and number of LBTT returns received by year for non-residential conveyances
|
Year |
LBTT declared due (£ millions) |
Annual percentage change in LBTT declared due |
LBTT returns received |
Annual percentage change in LBTT returns received |
Mean LBTT declared due per return received (Nearest £10) |
|
2019/20 |
170.5 |
1.9% |
6,440 |
-10.0% |
26,480 |
|
2020/21 |
122.9 |
-27.9% |
5,930 |
-7.9% |
20,710 |
|
2021/22 |
223.7 |
82.0% |
7,080 |
19.3% |
31,610 |
|
2022/23 |
187 |
-16.4% |
7,050 |
-0.4% |
26,540 |
|
2023/24 |
157.6 |
-15.7% |
6,520 |
-7.5% |
24,190 |
LBTT from non-residential conveyances, including ADS, was £158 million in 2023/24, a decrease of £29 million (16%) on the previous year. The number of LBTT returns received dropped by 8% to 6,520 from 7,050 last year. The LBTT declared due from non-residential conveyances in 2023/24 is at its lowest level since 2020/21.
Non-residential conveyances accounted for approximately 20% of total LBTT declared due and 6% of returns received in 2023/24. Total revenue from non-residential LBTT returns is disproportionately impacted by tax reliefs when compared to residential LBTT. This is partly responsible for the large difference between total residential LBTT revenue and non-residential LBTT revenue each year, though the main driving factors are the far smaller number of returns annually and the lower tax rates.
The average non-residential LBTT declared due, excluding ADS, per return fell by approximately 9% on the previous year to £24,190. This figure is approximately 5 times the average LBTT due per residential transaction.
Compared to residential LBTT, the value of LBTT declared from non-residential conveyances can change substantially year to year, due to fluctuations in the small number of very high value transactions seen in each year.
Figure 7: Distribution of numbers of non-residential conveyance transactions by total consideration, 2023-24
Figure 7 shows a breakdown of the number of non-residential conveyance returns by total consideration for 2023/24. The first three bars cover the £0 - £150,000 tax band, which accounted for 47% (3,080) of non-residential conveyance returns submitted in 2023/24. Though this is the 0% tax band, it should be noted that LBTT may be payable on conveyances within this band if they are linked transactions with a combined total consideration above the tax paying threshold.
The distribution is strongly right skewed and almost a quarter of all residential conveyances had a total consideration within the range of £50,000 - £100,000. There were 860 non-residential conveyances with a total consideration over £1 million, accounting for 14% of the total. At the very top end, there were 40 returns with a total consideration over £20 million, which is less than 1% of the total non-residential returns received.
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.
Table 6: LBTT excluding ADS declared due by month and year for non-residential conveyances (£Millions)
|
Month |
2019/20 |
2020/21 |
2021/22 |
2022/23 |
2023/24 |
|
Apr |
13.4 |
2.6 |
11.6 |
18.8 |
14.9 |
|
May |
12.8 |
6.3 |
12.9 |
17.8 |
9.2 |
|
Jun |
13.5 |
5.5 |
22.6 |
16.7 |
15.3 |
|
Jul |
19.7 |
11.5 |
17.3 |
15.4 |
11.1 |
|
Aug |
15.3 |
9.7 |
19.3 |
13.1 |
16.6 |
|
Sep |
14.4 |
9.9 |
13.0 |
15.2 |
12.2 |
|
Oct |
13.5 |
14.7 |
20.0 |
13.8 |
8.0 |
|
Nov |
8.5 |
12.1 |
15.5 |
19.1 |
11.5 |
|
Dec |
17.0 |
20.0 |
31.6 |
20.1 |
20.5 |
|
Jan |
17.8 |
8.4 |
17.3 |
10.8 |
7.1 |
|
Feb |
15.6 |
9.0 |
21.7 |
9.6 |
16.4 |
|
Mar |
9.1 |
13.3 |
21.0 |
16.6 |
15.0 |
The monthly distribution of non-residential LBTT tends to vary from year to year, because a small number of high-value transactions can have a significant impact on the overall tax. There is typically a peak in December, though the size of the peak varies. Non-residential LBTT of £20.5 million declared due in December of 2023 was the highest monthly figure of the last two financial years.
Figure 8: Non-residential LBTT, excluding ADS declared, for the top 5% of transactions by value, per year
Figure 8 shows that when ranked from highest to lowest transaction value (purchase price), the top 5% of non-residential returns account for the vast majority of LBTT due. In 2023/24 the top 5% most valuable transactions made up 75% of non-residential LBTT due. Total non-residential LBTT is generally highly dependent on higher value transactions, with 96% of LBTT coming from the top 20% most valuable non–residential transactions in 2023/24. In fact, the entire lower half of non-residential LBTT returns ranked by value, accounted for around 0.01% of the total non-residential LBTT declared due. This is partly influenced by the fact that almost half of all non-residential LBTT returns fell into the bottom (0%) tax band in 2023/24. Many non-residential returns also have no LBTT due as a result of being fully relieved.
LBTT declared due for the top 5% most valuable non-residential transactions varies from year to year, with these variations accounting for the majority of the change in non-residential LBTT declared due. LBTT declared due for the top 5% of transactions decreased by 15% in 2023/24 compared to the previous year, corresponding to a 15% decrease in total non-residential LBTT.
Leases
LBTT can be due on the Net Present Value (NPV) of rent payable on a lease, as well as chargeable consideration other than rent included in the purchase price, such as a premium payment. NPV is essentially the total value of the rent that will be paid, discounted to reflect its present value. LBTT rates for both taxable components are as follows:
LBTT rates for NPV of a lease over time:
|
Prior to 07 February 2020 |
07 February 2020 - Present |
||
|
NPV of rent payable |
Rate of tax to apply |
NPV of rent payable |
Rate of tax to apply |
|
Up to £150,000 |
0% |
Up to £150,000 |
0% |
|
Above £150,000 |
1% |
£150,001 to £2,000,000 |
1% |
|
|
|
Above £2,000,000 |
2% |
LBTT rates on chargeable consideration other than rent, such as payment of a premium, over time:
|
Prior to 25 January 2019 |
25 January 2019 - Present |
||
|
Purchase price |
Rate of tax to apply |
Purchase price |
Rate of tax to apply |
|
Up to £150,000 |
0% |
Up to £150,000 |
0% |
|
£150,001 to £350,000 |
3% |
£150,001 to £250,000 |
1% |
|
Above £350,000 |
4.5% |
Above £250,000 |
5% |
A non-residential lease that is granted, or is treated as having been granted, for the first time on or after 1 April 2015 is potentially chargeable to Land and Building Transactions Tax.
99% of leases are non-residential, but analysis in this section includes a small number of leases which taxpayers have classified as residential. However, the overall tax position remains correct as the LBTT due for a lease is the same whether it is residential or non-residential.