Land and Buildings Transaction Tax

• Read more about Land and Buildings Transaction Tax

• 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 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.

 Table 1: Number of LBTT returns received by type of transaction and year 

The number of LBTT returns received for each type of transaction has been more consistent over time than LBTT declared due. Since 2015, Residential conveyances have made up 88% of LBTT returns. 6% of returns have been non-residential conveyances, and 4% have been for leases. Reviews of a lease have accounted for 3% of returns in the four years since they came into effect in 2018/19.

Non-residential conveyances have made up 29% of LBTT declared, but only 6% of returns since 2016/17. This is because a large proportion of non-residential LBTT declared is usually made up of a small number of high-value transactions.

By contrast, reviews of a lease account for 3% of LBTT returns received, but less than 0.1% of LBTT declared due.

Figure 1: LBTT including ADS declared due, by year and transaction type

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2021/22 saw the highest ever LBTT declared due at £827 million. This up 57% on the year before, and is 38% higher than the previous high of £600.6 million recorded in 2019/20. This record-high figure was driven mainly by strong increases in both residential and non-residential LBTT.

Since the introduction of ADS in April 2016, residential LBTT revenue has typically been around double or more than that of non-residential LBTT. This remains true in 2021/22 with residential LBTT being 2.5 times the figure for non-residential LBTT. Before 2016, figures for residential and non-residential were much closer. The current ratio reflects rising house prices, and the fact that ADS mainly applies to residential conveyances. 

In 2021/22, residential conveyances accounted for 69% of total LBTT declared due. Non-residential conveyances accounted for 27% and leases were 3%. Reviews of a lease accounted for less than 0.1% of LBTT revenue, which has been the case since their introduction in 2018.

At £827 million, total LBTT revenue in 2021/22 was almost double the figure of £416 million which was recorded in its first year of collection (2015/16).​​​​​

Residential LBTT excluding ADS

LBTT rates and bands for residential transactions as of 1 April 2021:

Table 2: LBTT declared due, excluding ADS, and number of returns for residential conveyances

1. Note Rounded to the nearest £100

Residential LBTT declared due, excluding ADS, hit a record high of £416.5 million in 2021/22, which is 45% up from the previous high. This comes after the 11% annual drop which occurred in 2020/21 due to the effects of the COVID-19 pandemic, prior to which revenue from residential conveyances had increased each year on record. The number of residential LBTT returns also hit a record high, with 110,180 submitted.

The average amount of LBTT paid per return for residential conveyances had not varied much in the 4 years prior to 2021/22, with the figure ranging between £2,500 and £2,700. In 2021/22 this figure rose significantly, jumping 46% on the year before to an average of £3,800 paid per return. This rise is driven by an increase in the proportion of conveyances in the higher LBTT bands, which reflects rising property prices.

Figure 2: Number of residential conveyance returns received by month

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Figure 3: LBTT declared due, excluding ADS, for residential conveyances received by month

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Both the number of residential LBTT returns and the revenue excluding ADS show consistent seasonal, monthly, and weekly patterns. Fewer returns in all of the LBTT bands are received in January and February, and these months are also associated with lower average house prices. This is due in part to the proportion of returns relating to properties in the two highest tax bands being lowest at this time of year.

After accounting¹ for the known seasonal and calendar effects, the number of residential LBTT returns received remained relatively constant from 2015/16 to 2019/20. The effects of the COVID-19 pandemic on this trend can be seen from the end of March 2020 with the start of the first lockdown.

Between 15 July 2020 to 31 March 2021 the nil rate band threshold was temporarily increased from £145,000 to £250,000. This likely led to the unusually high number of returns seen in March 2021, and the large drop in April 2021 when the threshold reverted back to £145,000.

 Figure 4: Distribution of residential conveyance returns received by residential LBTT band and year 

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1.  Seasonal adjustment performed using the X13-SEATS-ARIMA procedure, using a weighted count of weekdays in each month as a regression factor to adjust for calendar effects.

Figure 4 shows that there has been an upward shift in the distribution of residential conveyances in each year, i.e. a decreasing proportion of returns in the £0 to £145,000 band each year and increasing proportions of returns received in all higher bands, becoming steeper in 2020/21. This is consistent with the increase in average residential property prices reported by Registers of Scotland year on year from 2016/17 to 2019/20, and a sharper increase in average residential property prices following the initial disruption of COVID-19 in 2020/21.

 

Figure 4 shows that 40% of returns received in 2021/22 had a total consideration of less than or equal to £145,000 and, therefore, had zero tax liabilities². However, Figure 5 shows LBTT revenue is dominated by the £325,000 to £750,000 band, which in 2021/22 contributed 58 per cent of LBTT, while making up only 13% of returns. The highest band (£750,001 and above) accounts for 1% of returns received and 23% of tax. 

 Figure 5: Distribution of residential LBTT revenue, excluding ADS, by residential LBTT band and year  

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The share of revenue contributed by the top two tax bands increased in 2020/21 due to the temporary change to the nil rate threshold, effective from 15 June 2020 to 31 March 2021, which had the effect of reducing tax liabilities in the second-lowest residential tax band (consideration from £145,000 to £250,000) to zero, and reducing gross tax liabilities for all other residential transactions by £2,100.

²Residential conveyance transactions under £145,000 can incur tax liability if they are linked.

Figure 6: Distribution of numbers of residential conveyance transactions by total consideration and tax band 2021/22 (based on effective date)

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Figure 6 shows a more detailed breakdown of the number of residential conveyance transactions by total consideration (e.g. house price) for transactions that took place in 2021/22. The majority of transactions are towards the lower end of the scale (approximately two-thirds are less than or equal to £220k), 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

If a taxpayer buys a new main residence before selling their previous main residence, they will have to pay Additional Dwelling Supplement (ADS). This payment can be reclaimed if the previous main residence is sold within 18 months, and the claim is made within five years of the submission date.

In 2021/22, ADS was charged at 4% of the relevant consideration for a transaction where the total purchase price of an additional dwelling was £40,000 or more. Prior to January 25 2019 it had been charged at 3%.  On December 16 2022 the rate was raised from 4% to 6%, but this period is not covered by this publication.

 Table 3: Gross ADS reclaimed and number of ADS repayments claimed for residential LBTT returns by year  

	Gross ADS declared due (£ millions)			LBTT returns received with ADS declared due
	Total	Reclaimed1	Reclaimed1 (%)	Total	Reclaimed1	Reclaimed1 (%)
2017/18	122.1	31.5	25.8%	23,530	4,050	17.2%
2018/19	128.1	35.6	27.8%	23,620	4,360	18.5%
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	188.4	31.5	16.7%	25,120	2,660	10.6%

 1. The data reflects claims for repayment of ADS received up to and including 31 May 2022 and will be revised over time as more claims for repayment of ADS are received. This is primarily for returns received in 2020/21 and 2021/22

Roughly £188 million in gross ADS was declared due in 2021/22, an increase of approximately £35 million (22%) on the previous year.  The sharp increase in ADS declared due from 2018/19 to 2019/20 was due largely to the increase in the ADS rate from 3% to 4% in January 2019.

Approximately 25,100 residential LBTT returns received in 2021/22 had ADS declared due, equating to 23% of all residential conveyances received, a similar proportion to previous years (21% in 2020/21).

Around 11% of taxpayers who submitted LBTT returns with ADS declared due in 2021/22 have since claimed repayment of ADS, accounting for 17% of the gross ADS declared due.

The ADS reclaim rate for 2021/22 appears lower than previous years. However, this figure will continue to increase over time as more claims for repayment are made. Only minimal revisions are expected to repayment claims relating to returns made up to 2019/20.

During the coronavirus pandemic in 2020, legislation was introduced to extend the ADS repayment claim period for residential transactions which were still within their original ADS repayment claim period at the start of the restrictions, from 18 months to 36 months. This means that some returns relating to 2018/19 and 2019/20 may still be eligible for ADS repayment claims in 2021/22 and 2022/23. However, the majority of repayment claims are still expected to have been made within one year

Figure 7: Proportion of gross ADS declared due subsequently reclaimed and LBTT returns received with ADS declared due and a subsequent claim for repayment, by month for residential conveyances

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The gross ADS reclaimed rises from 6% for the most recent month (% of ADS declared due in March 2022 which was reclaimed by end May 2022) to around 27% for the first 56 months (April 2016 to November 2020). This is a reflection of the fact that ADS taxpayers from earlier months have had 18 months from the effective date³ of the transaction subject to ADS to sell their previous main residence and then reclaim ADS. Similarly, the number of claims for repayment of ADS rises from 5% for the March 2022 to around 18% for April 2016 to November 2020.

For LBTT returns submitted with ADS declared due in 2021/22, around 84% of taxpayers stated they did not intend to reclaim ADS. This is the highest percentage on record, up from 80% in 2020/21 and 79% in 2019/20. One potential reason for this might be that improvements have been made to the ADS reclaiming guidance which outlined the rules around reclaims, and therefore helped to reduce the number of cases where the intention to reclaim ADS had been stated erroneously when the case did not qualify for a reclaim.

In 2020/21 around 73% of taxpayers who stated that they intended to reclaim ADS went on to do so, the highest proportion so far. in 2017/18, less than 2% of taxpayers who stated they did not intend to reclaim ADS went on to do so. This figure increased to 4.5% for both 2019/20 and 2020/21, and was 2.1% in 2021/22 for reclaims made by 31 May 2022.

These figures indicate that a substantial proportion (around 27% at its lowest in 2020/21) of taxpayers who stated that they intended to reclaim ADS did not subsequently do so. However, when a taxpayer had stated that they did not intend to reclaim ADS then it was unlikely that they would submit a claim for repayment

Figure 8: Distribution of residential conveyances by type of transaction (ADS declared due and intends/does not intend to reclaim ADS) and residential LBTT band, 2016/17 to 2021/22

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Figure 8 shows that the proportion of conveyances in the lowest tax band is twice 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 for transactions on or after 25 January 2019:

Table 6: Non-residential LBTT declared due and number of returns received by year

Note 1.Rounded to the nearest £100

LBTT from non-residential conveyances, including ADS, hit a record high of £228 million in 2021/22, an increase of £102 million (82%) on the previous year, while the number of LBTT returns received increased by 19%. Both figures are likely to reflect a build-up in demand from the previous year, which was impacted by the effects of the COVID-19 pandemic.

Despite only making up 6% of LBTT returns received, non-residential conveyances accounted for approximately 28% of total LBTT declared due in 2021/22. The average LBTT declared due per return also increased sharply in 2021/22, rising 53% on the previous year to £32,300. This likely reflects a number of factors including rising property prices and a higher proportion of very high value transactions.

Compared to residential LBTT, the value of LBTT from non-residential conveyances is highly volatile due to fluctuations in the small number of very high value transactions seen in each year.

Figure 9: Number of non-residential LBTT returns received by month and year

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The distribution of non-residential LBTT returns received throughout the year is typically uniform from month to month, but with notable peaks at the end of both the calendar year and financial year. 2021/22 marked a return to this pattern of returns received following the outlier in 2020/21. Due to the effects of the COVID-19 pandemic, the financial year began with an all-time low for non-residential returns in April 2020 and gradually recovered until a final sharp peak in March 2021.

Table 7: LBTT declared due by month and year for non-residential conveyances

Non-residential LBTT declared due is more variable than the number of LBTT returns received 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 magnitude varies from year to year. 2021/22 showed a very strong December peak, doubling the figure from the previous month. There was also a smaller peak in June, which rose 75% on the month before.

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Figure 10 shows that the most valuable 5% of non-residential LBTT returns tend to account for the vast majority of LBTT due. In 2021/22 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 97% of LBTT coming from the top 20% most valuable non–residential transactions in 2021/22. In fact, the entire lower half of non-residential LBTT returns ranked by value, accounted for less than 0.05% of the total non-residential LBTT declared due.

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 increased by 87% in 2021/22 compared to the previous year, which was heavily impacted by the COVID-19 pandemic, corresponding to an 81% increase in total non-residential LBTT . Compared to 2019/20, LBTT for the top 5% of transactions was 32% higher in 2021/22, and total non-residential LBTT was up by 31%.

Leases

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, perhaps mistakenly. However, the overall tax position remains correct as the LBTT due for a lease is the same whether it is residential or non-residential.

Table 8: LBTT declared due and number of LBTT returns received by year for leases

£26 million in LBTT was declared due for leases in 2021/22, accounting for 3% of total LBTT declared. This was an increase of £7 million (40%) from 2020/21, while the number of lease returns received increased by 30%. LBTT from leases tends to have high variance from year to year, but the sharp increase in 2021/22 is due in part to a recovery from 2020/21 which was affected by the COVID-19 pandemic.

Like non-residential returns, the number of lease returns received tends to be highest towards the ends of the financial and calendar years. Unlike conveyances, of which generally fewer returns are received in January and February, there is no obvious low season for leases.

LBTT declared due for leases shows similar high variability to non-residential conveyances and a small number of high value transactions can have a significant impact on the overall tax

Figure 11: LBTT declared due for top 5% of lease transactions, by year

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In the last five years, revenue from the top 5% most valuable lease transactions has accounted annually for 63% to 74% of total LBTT from leases.  In 2021/22 the top 5% of transactions made up 70% of LBTT from leases. Like non-residential conveyances, the distribution of LBTT from leases in general is heavily skewed towards the most valuable transactions, with 91% of total lease LBTT coming from the top 20% of transactions.

LBTT for leases may be due on the net present value of rent, as well as payment of a premium to secure the lease. 87% of all LBTT declared due on leases in 2021/22 was due to rent, with the remaining 13% due to premiums. LBTT due on premiums is dominated by a small number of large premiums over £350,000. LBTT due on the rental value of leases is more widespread, with 59% of lease returns declaring some amount of LBTT due on rent in 2021/22. ​​​​​

Reviews of the tax chargeable for a lease

Reviews of a lease include:

• Three-yearly reviews, which inform Revenue Scotland of any changes which have occurred since the effective date or previous review date. Tax chargeable on the lease is reviewed and the new Net Present Value is calculated when the review is submitted.
• Assignations: when a lease is assigned to a new tenant, the outgoing tenant must submit a review within 30 days of the lease being signed, including an assessment of the amount of tax chargeable reflecting any changes since the last return was submitted.
• Terminations: When a lease is terminated, the tenant at the point of termination must submit a return to Revenue Scotland, including an assessment of the amount of tax chargeable reflecting any changes since the last return was submitted.

The first six-year reviews became due from 1 April 2021 and make up part of the three-year review figures for this year.

Table 9: LBTT declared due and number of returns received for reviews of a lease by type of review and the amount due

Review returns which declare a decrease in the amount due from the original lease return, reflect claims for repayment. Three-yearly lease reviews resulted in net LBTT declared due of £1.2 million in 2021/22, consisting of £1.8 million in further LBTT due and £0.6 million of repayments claimed. Lease assignations netted approximately zero LBTT in 2021/22 after repayments. Lease terminations resulted in a net repayment of £0.7 million, bringing the overall net LBTT declared due for all lease reviews to £0.6 million.

Approximately 4,590 reviews of a lease were received in 2021/22, of which 67% declared no change in the LBTT due from the original lease return (meaning LBTT declared due on review was £0). 20% declared further LBTT due and 13% claimed a repayment of LBTT.

Three-yearly lease reviews accounted for 84% of reviews of a lease received.  The total number of lease reviews received was 58% higher than the previous year, driven primarily by a 69% rise in the number of three-yearly lease reviews.

Sub-Scotland

Sub-Scotland: Residential LBTT

Figure 12: Estimates of LBTT declared due, excluding ADS, for residential conveyances by local authority (£Millions)

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In 2021/22, City of Edinburgh accounted for £125 million (30%) of  residential LBTT declared due, excluding ADS, by far the biggest contribution from a single council area. Next highest was Glasgow City, making up 8% of total residential LBTT at £33 million. City of Edinburgh has accounted for 30% to 34% of LBTT revenue, excluding ADS, in each of the last seven years. No other local authority has ever accounted for more than 9%.

The 3 local authorities with the highest mean LBTT declared due per transaction for residential returns were:

• City of Edinburgh at £10,000
• East Lothian at £8,900 and
• East Renfrewshire at £8,400.

The lowest averages were for:

• Na h-Eilianan Siar at around £800
• West Dunbartonshire at £900 and
• North Lanarkshire at £1,000.

From 2020/21 to 2021/22, LBTT revenues increased in all 32 local authorities. City of Edinburgh saw the largest absolute increase with a rise of £39 million (46%), while the largest percentage increase occurred in Orkney Islands where residential LBTT was up 206% (from £0.2 million to £0.7 million). The lowest percentage increase on the previous year was in Clackmannanshire, which saw 32% more residential LBTT declared than in 2020/21. Note that Clackmannanshire and Orkney Islands have relatively small numbers of transactions, so are more likely to vary year to year in terms of percentage change.

Figure 13: Estimated number of residential conveyance returns received by local authority

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Glasgow City had the most residential conveyance returns received in 2021/22 with 12,560 returns (11% of the total), just ahead of City of Edinburgh with 12,440 returns (11%).

Numbers of residential conveyances increased in 30 of 32 local authorities from 2020/21 to 2021/22, with City of Edinburgh showing the largest absolute increase of 2,010 more than the previous year.

The council areas with the biggest percentage increase in the number of returns on the previous year were:

• Na h-Eileanan Siar with an increase of 38%
• Aberdeen City with an increase of 33%
• Aberdeenshire with an increase of 28%.

The council areas with the lowest increase, or a decrease, on the previous year were:

• East Dunbartonshire with a decrease of 5%
• East Lothian with a decrease of 3%
• West Lothian, which increased by only 1%.

Sub Scotland: Additional Dwelling Supplement

Figure 14: Estimates of gross residential ADS declared due (£Millions) by local authority and percentage which is intended to be reclaimed by taxpayer

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City of Edinburgh accounted for 22% of gross ADS declared due in 2021/22 with £41 million, an increase of £9 million on the previous year. Glasgow City accounted for the second-largest share of ADS, making up 12% of the total with £22 million. Edinburgh tends to dominate LBTT excluding ADS (30% of total) more than gross ADS. This is because the ADS rate is flat whereas the LBTT rate is progressive, meaning the effective tax rate increases with total consideration.

The council areas with the highest proportion of gross ADS coming from taxpayers who don’t intend to reclaim it were Glasgow City and Dundee City at 85% . This figure was lowest in Orkney Islands at 55%.

The council areas with the greatest number of returns with ADS declared due were:

• Glasgow City with 3,350
• City of Edinburgh with 3,230
• Fife with 1,600.

At 92%, Glasgow City also had the highest proportion of returns where the stated intention was to not reclaim ADS. The lowest figure was for Orkney Islands, where 65% of returns stated no intention to reclaim ADS.

Sub-Scotland: Residential conveyances not replacing a main residence

Figure 15: Estimates of the percentage (%) of all residential conveyance returns received where the taxpayer did not intend to reclaim ADS declared due, by local authority and year

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The data shown in Figure 15 is an indicative measure of the percentage of all residential conveyances where the taxpayer is purchasing an additional property (e.g. buy-to-let dwelling or a second home) rather than replacing their main residence. In 2021/22 this was highest in Argyll and Bute at 29.4% (rounded to 29% in figure 15) and Na h-Eileanan Siar at 29.2%.

The lowest figure was in Midlothian, where only 10% of residential LBTT returns declared ADS due, which the taxpayer did not intend to reclaim. Midlothian has been lowest in four of the past five years.

For the council areas with the highest numbers of residential returns, the figures were:

• Glasgow City: 25%
• City of Edinburgh: 23%
• South Lanarkshire: 17%

Sub-Scotland: Residential tax bands

Figure 16: Distributions of residential LBTT returns by local authority and tax band, 2021/22

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Figure 16 shows the distribution of residential transactions by tax band, with the top two bands (£325,000 to £750,000 and £750,000 and above) combined to protect taxpayer confidentiality.

The council areas with the highest proportion of returns in the top grouped (£325k +) band were:

• East Renfrewshire at 34%
• City of Edinburgh at 32%
• East Lothian at 31%

One in 25 residential returns in City of Edinburgh fell into the highest underlying tax band (£750k+). These 550 returns accounted for nearly half of the 1,140 total returns within the £750k+ tax band in Scotland. East Renfrewshire was the only local authority where fewer than half of transactions were in the bottom two tax bands (49%).

West Dunbartonshire had the highest proportion (69%) of transactions in the nil rate tax band (£0-145k). For 11 of the 32 local authorities, more than half of transactions fell into the nil-rate tax band.

Sub-Scotland: Non-residential conveyances

Sub-Scotland LBTT data is analysed by NUTS 2 areas instead of local authorities for non                residential returns, to minimise the risk of disclosing protected taxpayer information.

NUTS stands for Nomenclature of Units for Territorial Statistics, these units were originally devised for the purpose of collecting, developing and harmonising European regional statistics.

Scotland is divided into five of these units, mainly by grouping together Council Areas. These five areas are: Highlands and Islands, North Eastern Scotland, Eastern Scotland, West Central Scotland, and Southern Scotland.

Figure 17: Estimates of non-residential LBTT declared due by NUTS 2 area and year

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Eastern Scotland consistently makes up the largest share of non-residential LBTT declared due, accounting for £97 million (42%) in 2021/22. The highest number of returns also comes from Eastern Scotland at 2,460 (35%).

All NUTS 2 areas saw an increase in the number of non-residential returns and LBTT due in 2021/22 compared with the previous year. Eastern Scotland, West Central Scotland and North Eastern Scotland all saw significant increases in LBTT due following a dip in 2020/21 due to the impact of COVID 19. Southern Scotland and Highlands and Islands saw more gradual increases and did not experience the dip in 2020/21.

North Eastern Scotland saw a 13% increase in the number of returns in 2021/22 while LBTT due increased by 269%. This reflects the fact that for non-residential LBTT, a small number of very high value transactions can greatly affect the total LBTT due. For this reason, care should be taken when interpreting annual trends in non-residential LBTT by NUTS 2 area.

Figure 18: Estimated number of non-residential returns by NUTS 2 area and year

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Reliefs 

There are a number of tax reliefs which provide whole or partial relief from LBTT. Common reliefs include:

• First-Time Buyer relief, which currently relieves LBTT on the first £175,000 of the consideration payable for first time buyers, subject to conditions.
• Charities relief, where the buyer in a land transaction is a charity and certain conditions are met.
• Group relief, where at the effective date of a land transaction the seller and buyer are both companies in the same group.

Table 10: Estimated LBTT revenue forgone to reliefs and number of LBTT returns received in which some LBTT revenue has been forgone to reliefs, by year

Notes: 1. ADS revenue forgone to reliefs is distinct from claims for repayment of ADS following the sale of the taxpayer's previous main residence.

2. An LBTT return may have LBTT excluding ADS and ADS revenue forgone to reliefs if both are due and relief is claimed. This column counts LBTT returns where LBTT excluding ADS or ADS revenue has been forgone to reliefs and, therefore, will not equal the sum of the previous two columns.

It is estimated that £131 million of LBTT revenue was forgone to reliefs in 2021/22, which represents a £26 million (25%)  increase on the previous year. In the same period, total LBTT declared increased 57% and the total number of returns received was up 16%. The number of returns received where some LBTT was foregone to reliefs increased nearly six-fold.

First-time buyer relief was introduced in 2018, and largely accounts for the sharp increase in the number of returns with LBTT foregone to relief in 2018/19 and 2019/20. The steep decline in 2020/21 can be mostly attributed to the temporary increase in the nil-rate tax band. During this period, a large number of transactions which normally would have qualified for first time buyers relief, simply had no LBTT due, making the relief temporarily redundant.

ADS revenue forgone to reliefs is estimated to have accounted for 4% of LBTT revenue forgone to reliefs in the last 5 years.

Table 11: Estimated LBTT revenue forgone to reliefs and number of LBTT returns received in which some LBTT revenue has been forgone to reliefs by type of property and year

Residential returns made up 96% of returns in which some LBTT was forgone to reliefs in 2021/22. However, non-residential returns made up the majority of the total value of LBTT forgone to reliefs (73%). The proportion of the total value of LBTT forgone to reliefs which was attributable to residential reliefs was larger than usual in 2021/22 at 27%. Typically this figure has been somewhere between 11% and 16%. This increase is mainly due to reliefs for a small number of very high value residential transactions.

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Group relief typically makes up the majority of LBTT forgone to reliefs, accounting for 53% in 2021/22. Changes in the total reliefs are largely driven by changes in group relief. Group relief provides relief from LBTT where the seller and buyer are both companies in the same group. Where certain rules are met, this allows companies to move property within a corporate group structure without a liability for LBTT being incurred.

The second highest proportion of LBTT forgone to relief came from Other reliefs, which groups together all reliefs outside the six biggest single contributors. More information about these reliefs can be found on the Revenue Scotland website. As with residential reliefs, a small number of high value transactions can have a significant impact on the total in this category. Charities relief was next highest, accounting for 9% of revenue forgone to relief.

First-Time Buyer Relief

First-Time Buyer Relief accounted for 91% of returns received in which some LBTT revenue was forgone to relief in 2021/22. Every year since its introduction, aside from in 2020/21, when there was a temporary increase to the nil-rate tax band, First-Time Buyer Relief has made up the majority of claims for relief.

Despite accounting for the vast majority of claims for relief, Figure 19 shows that First-Time Buyer relief accounts for only a small portion of the estimated LBTT revenue foregone to reliefs. This is because First-Time Buyer relief provides a maximum of £600 relief from LBTT per transaction, unlike other relief types which can relieve the entire tax liability of potentially much larger transactions.

Introduction

• Read more about Introduction

Revenue Scotland is responsible for the management and collection of the devolved Land and Buildings Transaction Tax (LBTT) and Scottish Landfill Tax (SLfT).

This is Revenue Scotland’s fifth annual statistics publication summarising trends in the devolved taxes. The publication generally covers the period from 1 April 2015 to 31 March 2022. In some cases, for brevity, data is only presented for the latest five years. Older data for most figures and tables can be found in our previous annual publications.

Revenue Scotland also publishes monthly official statistics on LBTT and quarterly official statistics on SLfT. More up-to-date high-level statistics are available from these two publications, but they do not contain some of the more detailed data found in this publication. Both publications can be found on the Revenue Scotland website and the open data is found on statistics.gov.scot.

The purpose of this annual publication is to summarise and provide further commentary on Revenue Scotland’s official statistics. It also provides information that is not available in the monthly and quarterly official statistics publications, for example:

• Sub-Scotland estimates of LBTT declared due and the number of LBTT returns received.
• Estimates of LBTT revenue forgone to reliefs and the number of LBTT returns received with LBTT revenue forgone to reliefs.
• Taxable (SLfT) disposals by European Waste Catalogue (EWC) code.

The LBTT data presented in this publication comes from LBTT returns, and are based on the date the return was received by Revenue Scotland (the submitted date). Appendix A explains how data on this basis relates to data on an effective date (date of transaction) basis.

Appendix B explains how Revenue Scotland’s Official Statistics publications relate to its Annual Report and Financial Statements, and the differences in how the sets of figures are compiled.

This publication is an Official Statistics publication for Scotland. Official and National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics by professionally independent statisticians. Both undergo regular quality assurance reviews to ensure that they meet customer needs and are produced free from any political interference.

For any further information please contact us at statistics@revenue.scot

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2021-22 Annual Summary of Trends in the Devolved Taxes published

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Annual Summary of Trends in the Devolved Taxes 2021-22

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Executive summary

Land and Buildings Transaction Tax

• £827 million in LBTT revenues were declared due during 2021/22, including £161 million net Annual Dwelling Supplement (ADS) payments, some portion of which may later be reclaimed. • In 2021/22, residential conveyances accounted for 69% (£573 million) of total LBTT declared due, non-residential conveyances accounted for 28% (£227 million) and leases accounted for 3% (£26 million).

• A record high for LBTT revenues from residential conveyances was recorded in 2021/22. This comes after a large drop in 2020/21, due to the restrictions introduced during the COVID-19 pandemic. There had been a steady year-on-year increase between 2015/16 and 2019/20.

• Residential LBTT revenue excluding ADS is dominated by transactions in the £325,000 to £750,000 band, which made up 58% of residential revenue in 2021/22 while making up 13% of residential returns. 40% of residential returns received in 2021/22 fell into the nil rate (£0 to £145,000) tax band, the lowest seen in a year, and continuing the year-on-year decrease from 53% in 2015/16. Additional Dwelling Supplement

• £188 million gross ADS was declared due in 2021/22, a 22% increase on the previous year. Gross ADS declared due increased every year from 2016/17 to 2019/20 before falling in 2020/21, reflecting a drop in the number of LBTT returns received.

• ADS was declared due for 23% of all residential conveyances in 2021/22, up from 21% in the previous year. • For 84% of ADS returns submitted in 2021/22, the taxpayer stated they did not intend to reclaim the ADS declared due. This is up from 80% in the previous year and is the highest percentage since ADS was introduced. Transactions where the taxpayer does not intend to reclaim the ADS due are more likely to be lower in value compared to transactions where the taxpayer intends to reclaim ADS.

• 84% of ADS reclaims are made within one year of the original transaction.

Non-Residential Transactions

• £227 million LBTT was declared due for non-residential conveyances in 2021/22. This is an 82% increase on 2020/21, and a 31% increase on 2019/20.

• Each year so far, the largest 5% of transactions have contributed 71% to 75% of total LBTT revenues from non-residential conveyances, with a similar distribution for leases (64% to 74%). Leases

• Leases contributed £26 million LBTT revenue in 2021/22, the second highest annual total so far. The highest ever annual total was £29 million in 2018/19.

• Three-year lease reviews resulted in net LBTT declared due of £1.2 million in 2021/22. This value was partially offset by other review types (assignations and terminations) so that the net LBTT declared due for all reviews of a lease was £0.6 million.

• 4,590 LBTT returns for reviews of a lease were received in 2021/22, an increase of 58% from 2020/21, which saw a low number of returns due disruptions caused by the COVID 19 pandemic. 67% declared no change in LBTT due from the original lease, 20% declared additional LBTT due and 13% resulted in a claim for repayment of LBTT. Three year lease reviews accounted for 84% of reviews of a lease, with assignations making up just under 7% and terminations making up almost 10%.

Sub-Scotland

• The City of Edinburgh accounted for £125 million in residential LBTT revenues (excluding ADS) in 2021/22, 30% of the total. The second largest contributor, Glasgow City, accounted for £33 million (8%), although there were similar numbers of residential conveyances in both local authorities (around 12,500).

• In 2021/22, the proportion of residential conveyance returns in which the taxpayer declared ADS due, but did not intend to reclaim it, ranged from 10% to 29%. The highest were in Argyll and Bute(29%), Na-h-Eileanan Siar (29%), and Dundee City (26%). The lowest were in Midlothian (10%) and East Renfrewshire (11%).

Reliefs

• £131 million of potential LBTT revenue was foregone to reliefs in 2021/22, with around 17,700 returns receiving relief.

• From 2020/21 to 2021/22, the number of returns claiming relief increased nearly six-fold from 3,030 to 17,700. This is predominantly due to the reversal of a temporary change to the upper threshold for the nil rate band of tax (from £145,000 to £250,000 from 15 July 2020 to 31 March 2021) which essentially rendered First-Time Buyer relief temporarily redundant. When compared to the last pre-pandemic year (2019/20) the figure is up 14% from 15,530.

• Non-residential transactions accounted for the 73% of revenue forgone to reliefs in 2021/22, primarily group relief (53% of all relief).

Scottish Landfill Tax

• Scottish Landfill Tax revenue has fallen from £149 million in 2015/16 to £125 million in 2021/22. Total tonnage of declared taxable disposables was 2,028,700 tonnes. This is up 13% on the previous year, but down slightly (less than 1%) on the last pre-pandemic year (2019/20). Discounting the pandemic-affected year 2020/21, there is a decreasing trend in tonnage of waste going to landfill.

• £125 million of SLfT declared due in 2021/22 represents an increase of 18% from 2020/21, and an increase of 6% on 2019/20. Previously there was a year on year downward trend, which had been driven by decreases in the disposal of standard rate waste to landfill (1.35 million tonnes in 2021/22, up 15% from the previous year).

Scottish Budget 2023 to 2024 changes to Land and Buildings Transaction Tax (LBTT)

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Summary Financial Data

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Devolved Taxes 2017-22

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LBTT 2017-22

 

LBTT	2017-18	2018-19	2019-20	2020-21	2021-22
Residential	258,386	262,336	286,908	259,632	418,390
Net ADS	94,645	99,211	120,226	115,104	140,750
Non-residential	204,236	192,638	190,234	142,618	248,043
Total LBTT (£’000)	557,267	554,185	597,368	517,354	807,183
No. of Tax Returns	116,380	120,280	121,050	109,170	126,350

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SLfT 2017-22

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Resource Spend (including programme costs) 2017-22

11 Includes compensation on early retirement

12 Includes staff and non-staff costs of developing processes and systems to comply with new legislation or the introduction of IT systems 

Financial Statements 2021-22

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The notes on pages 84-97 form part of these financial statements.

The Chief Executive and Accountable Officer authorised these financial statements

for issue on 1 November 2022.

Elaine Lorimer – Chief Executive of Revenue Scotland and Accountable Officer

The notes on pages 84-97 form part of the financial statements.

Intangible Assets

 7. Trade and other payables

Independent Auditor’s Report

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Independent auditor’s report to Revenue Scotland, the Auditor General for Scotland and the Scottish Parliament

Reporting on the audit of the financial statements

Accountability Report

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Corporate Governance Report 

The Directors’ Report 

Revenue Scotland Board 2021-22 In line with paragraph 1 of Schedule 1 to the RSTPA, the Scottish Ministers are responsible for appointing between five and nine individuals to be members of the Revenue Scotland Board. One individual is appointed by Ministers as Chair. 

Ministers determine the period and terms of appointment of Board members and may re-appoint individuals who already are, or have been on the Board, subject to evidence of effective performance and to their continuing to have the skills, knowledge and experience required on the Board at the time of reappointment.

Appointments are made following a public appointments exercise regulated by the Commissioner for Ethical Standards in Public Life in Scotland. 

Board Members 2021-22

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Dr Keith Nicholson

Chair – appointment

concluded 31 July 2021

Dr Nicholson is an internationally recognised scientist and award-winning company director with more than 30 years’ experience in statistical analysis and data modelling. He runs an independent consultancy providing strategic advisory services. His specialist background is in transactional websites, cyber security and technology.

 

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Aidan O’Carroll

Chair – appointed

1 August 2021

Aidan O’Carroll is a former senior partner at EY, one of the world’s largest professional services firms, which he left in July 2020

after 35 years. Formerly Head of Tax for EY in the UK, Aidan has advised both local and global companies across a wide spectrum of tax and business issues around the world. He is currently Scottish Chair of Institute of Directors and has a number of Non-Executive Director roles in organisations based in the UK. He has considerable experience in dealing with regulatory matters in both emerging and developed markets; he is also a regular contributor and speaker at business conferences.

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Lynn Bradley

Chair of the Audit and Risk Committee (until 31 December 2021)

Board and committee appointment concluded 30 June 2022

Lynn Bradley is an accountant with more than 30 years’ experience in the Scottish public and private sectors. Previous roles include Director of Corporate Programmes and Performance at Audit Scotland and Chair of CIPFA Scotland. She currently lectures in the Adam Smith Business School at the University of Glasgow and is a member of the Institute of Chartered Accountants of Scotland (ICAS) Audit and Assurance panel. She is also a trustee of Cash for Kids (Radio Clyde).

 

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John Whiting CBE

Member of the Staffing and Equalities Committee

Board and committee appointment concluded 30 June 2022

John Whiting was a non-executive director of HMRC until September 2019; he remains a director of the Taxation Disciplinary Board; until March 2017, he was Tax Director of the UK’s Office of Tax Simplification (OTS). Other previous roles include Tax Policy Director of the Chartered Institute of Taxation, many years as a tax partner with PricewaterhouseCoopers and membership of the First-Tier Tax Tribunal. 

 

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Jean Lindsay

Chair of the Staffing and Equalities Committee 

Jean Lindsay was previously the Director of Human Resources at the Forestry Commission. She is a Chartered Fellow of the Institute of Personnel and Development (FCIPD) and has experience in leadership, strategic people management, change management and corporate governance in the public sector. She is also a member of the Board of Crown Estate Scotland. 

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Martin McEwen

Member of the Audit and Risk Committee (Chair from 1 January 2022) 

Martin McEwen is a Chartered Accountant and Tax Advisor. He is the Head of Tax at SSE plc and a member of their Finance Leadership Team. He joined the company in 2008 after a number of years at PwC. He is a regular speaker on tax transparency and responsible corporate tax behaviour. He has sat on both the Scottish Taxes and the Corporate Tax Committees at ICAS. 

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Simon Cunningham

Member of the Audit and Risk Committee

Simon Cunningham is an experienced risk, audit and governance specialist and Chartered Accountant with audit and risk experience at Scott-Moncrieff, Aegon and McInroy & Wood. He is also a member of the ARC at the Scottish Courts and Tribunals Service, a member of the Board of Directors of the Free Church of Scotland Pension Scheme Trustees Ltd, and was a member of the Board of Compass Christian Centre Ltd until April 2022. 

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Rt Hon Ken Macintosh

Member of the Staffing and Equality Committee – appointed 1 June 2022

Ken Macintosh was the Presiding Officerof the Scottish Parliament until stepping down from elected politics in 2021.

He began his working life with the BBC, serving as a senior producer and broadcast journalist on a range of news and current affairs programmes. He was elected to the first Scottish Parliament in 1999 and held a number of front bench roles before being chosen as Speaker in 2016. Ken is a member of the Privy Council as well as a Trustee of several charities.

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Robert MacIntosh

Member of the Audit and Risk Committee – appointed 1 June 2022

Robert MacIntosh is Professor of Strategic Management and Pro Vice Chancellor for Business and Law at Northumbria University. He has a PhD in engineering and his work focuses on strategy and change with senior leadership teams. He has worked with over 100 organisations and has significant experience as a chair and trustee. He is a Fellow of the Institution for Engineering and Technology, the Academy of Social Sciences and the British Academy of Management. He is currently the chair of the Chartered Association of Business Schools and was formerly the chair of the social care charity Turning Point Scotland.

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Idong Usoro

Member of the Staffing and Equalities Committee – appointed 1 June 2022

Idong Usoro has over 10 years of designing and implementing digital transformations, security strategies, policy, enterprise architecture functions, and technical solutions at executive level. This has spanned working in Europe and North America in enterprise solutions, consultancy and IT leadership roles with central, local government, universities and multinational companies. His research work has engaged

both private and public organisations, innovation agencies that including UKRI/ Innovate UK, Cancer Research UK, European innovation/research institutes and the European Commission. He currently serves as an Executive Board Trustee with the Abbeyfield Society and works as a technical consultant to private technology organisations in the immersive solutions, construction, legal, fintech and life sciences sectors.

Performance Report

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Performance Overview 

This overview gives a summary of Revenue Scotland’s purpose and objectives, key risks to the delivery of those objectives, together with its budget and performance for the year. Further detail is

Introduction 

The performance report includes a short performance summary and an analysis section which considers performance against the strategic outcomes of our Corporate Plan 2021-24. 

Who we are and what we do 

Revenue Scotland was established by the Revenue Scotland and Tax Powers Act 2014 (RSTPA) and is responsible for the collection and management of the taxes fully devolved to Scotland – currently Land and Buildings Transaction Tax (LBTT) and Scottish Landfill Tax (SLfT). 

As a non-ministerial office, Revenue Scotland is part of the Scottish Administration and is directly accountable to the Scottish Parliament to ensure the administration of tax is independent, fair and impartial. included within the Performance Analysis section.

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The Scottish Government is responsible for tax policy and the setting of tax rates. Revenue Scotland supports policy development through the provision of information, advice and data based on our operational experience. The Scottish 

Fiscal Commission (SFC) is responsible for providing independent forecasts of tax revenue in line with the Fiscal Framework. To support forecasting work, Revenue Scotland provides the SFC with SLfT and LBTT data in an anonymous, aggregated form. 

Revenue Scotland delegates the delivery of specific functions for the collection of SLfT to the Scottish Environment Protection Agency (SEPA). 

We also work with His Majesty’s Revenue and Customs (HMRC) for the purposes of compliance activity, and with the Welsh Revenue Authority and other tax authorities on the British Isles Tax Authorities Forum sharing knowledge and best practice in tax collection and management.

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How we are governed 

The Revenue Scotland Board at 31 March 2022 comprised six members appointed by Scottish Ministers through the Scottish Public Appointments process. A further three members were appointed with effect from 1 June 2022 and the appointments of two members were concluded at the end of June 2022. The Board has responsibility for the strategic direction, oversight and governance of Revenue Scotland. Board members provide specialist knowledge in key areas and act as ambassadors for the organisation. 

The Board has two committees; the Audit and Risk Committee (ARC) and the Staffing and Equalities Committee (SEC), which undertake detailed scrutiny of key areas of work and report on these to the Board. 

The Chief Executive is accountable to the Board and acts in a personal capacity as the Accountable Officer for Revenue Scotland. 

The Chief Executive is responsible for the day-to-day leadership and operation of the organisation. 

Further details about the activities of the Board, committees and staff are contained in the Accountability Report section.

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How we are structured 

The Senior Leadership Team comprises the Chief Executive along with the Head of Tax, Head of Corporate Functions and Head of Legal Services all of whom report directly to the Chief Executive. The diagram below illustrates Revenue Scotland’s organisational and team structure. 

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How are we funded

Revenue Scotland is part of the Scottish Administration and has its budget set out in the annual Budget Bill. The Scottish Government liaises with Revenue Scotland to identify its budgetary requirements which are then reflected in the Budget Bill that Ministers present to the Scottish Parliament. Where additional funding for major programmes is required, proposals for funding are developed in line with the guidance on business cases in HM Treasury’s ‘The Green Book: appraisal and evaluation in central government’. 

Revenue Scotland is responsible for managing its budget for each financial year to deliver its statutory functions. Revenue Scotland has authority to incur expenditure on individual items but this is subject to the limits imposed by the budget allocated by the Scottish Parliament and guidance from Scottish Ministers. 

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Revenue Scotland’s purpose and vision

On 30 November 2021, we published our third Corporate Plan, for the period of 2021-24,after laying it in Parliament. The Corporate Plan 2021-24 outlines the purpose, vision, strategic objectives and performance measures for Revenue Scotland. Together, these will help us continue our work in raising revenue to support public services across Scotland.

Purpose

To efficiently and effectively collect and manage the devolved taxes which fund public services for the benefit of the people of Scotland.

Vision

We are a trusted and valued partner in the delivery of revenue services, informed by our data, digital by design, with a high-performing and engaged workforce.

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Corporate Plan 2021-24 strategic outcomes

After seven years of operation, Revenue Scotland is firmly established in the tax and public sector landscapes in Scotland. Our Corporate Plan 2021-24 is built on the four pillars of excelling in delivery, investing in our people, reaching out and looking ahead, and on the objectives we have identified, that will take the organisation forward in a sure-footed and value-added way. It builds on our strong achievements to date – not least the collection of approaching £5 billion ofrevenue since 2015, all of which stays in Scotland and helps fund Scotland’s public services.

Excelling in delivery

We are committed to delivering excellent public services with users at the heart of them. Our focus is on investing in new systems and the latest technology, as well as ensuring we

are able to continue to get quality data analytics to make smarter decisions and connections – all in order to meet taxpayer needs and expectations while making our work as efficient and effective as possible.

Investing in our people

We have a great team, who, along with our partners, are our most important asset. Staff health, safety and wellbeing are our priority, and our staff have demonstrated resilience to

the challenges that the COVID-19 pandemic brought about. Our People Strategy sets out our ambition to be an employer of choice which is diverse and inclusive. We are committed to investing in our people, building capability and nurturing our talent. We maintain an acute awareness that we exist as a public service, and we will continue to adapt our ways of working to meet the needs of our staff and taxpayers.

Reaching out

We are an accessible, collaborative and transparent organisation that is keen to learn from others and to share our experiences and expertise. In particular, we strive to engage users in the design of our services, maximise the opportunities of technology and expand the reach of our engagement to diversify our stakeholder base. We will collaborate effectively with others to deliver public service improvements and efficiencies.

Looking ahead

We continue to strive to deliver excellence in all we do and are committed to responding constructively to current economic and societal challenges and requirements as part of

public sector reform. We plan and deliver change and new responsibilities flexibly, on time and within budget. We have a digital mindset, maximising the use of our data and harnessing new technology to improve our working practices and services.

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How we deliver our purpose and measure our success 

Revenue Scotland delivers its purpose through the strategic outcomes in the Corporate Plan. Performance is measured through the use of key performance indicators (KPIs) as set out in the Corporate Plan, and against the delivery of milestones relating to the objectives of the key projects. 

We have a Business Plan that sets out projects and other cross-cutting pieces of work which help us deliver the strategic outcomes in the Corporate Plan, and it also informs team plans and personal work objectives. This structure provides a clear ‘line of sight’ between the work objectives of each staff member and the strategic outcomes set out in the Corporate Plan. 

A structured approach to performance management supports how we monitor and record progress across the organisation. Monthly reports are produced for the Senior Leadership Team that capture the collective contributions made to our performance, and a quarterly report is produced for the Board. The performance reports are also considered alongside regular assessment of our operational performance, key performance indicators, financial position, analysis of risk and consideration of our capacity. These all contribute to the performance record and form the basis of our analysis of performance that follows. 

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National Performance Framework

Scotland’s National Performance Framework (NPF) sets an overall purpose and vision for Scotland. It establishes broad ‘National Outcomes’ and provides measures on how well Scotland is progressing towards those outcomes. 

Our Corporate Plan 2021-24 clearly aligns with and prominently features the National Outcomes. It is this plan, and in it the National Outcomes, that strategically direct and prioritise all our work as an organisation. To ensure the successful delivery of the Corporate Plan, our objectives and deliverables are further defined and translated into action through a strategic framework of corporate strategies, business plan and team plans, and we have comprehensive performance reporting processes in place to monitor our progress against objectives on a monthly and quarterly basis. 

Through the collection of devolved tax revenues that fund Scottish public services, Revenue Scotland indirectly contributes to all of the National Outcomes. Six of the National Outcomes are particularly relevant to the work we do: economy, environment, fair work and business, communities, human rights and health. In these areas we contribute through investment in staff, commitment to equality and diversity, through working in collaboration with stakeholders and taxpayers and acting in an open, transparent and accountable manner. Scottish Landfill Tax, in particular, is essentially an environmental fiscal measure and acts to promote the circular economy. In this way, we make an important contribution to the environmental NFP outcome.

The following table shows which Revenue Scotland strategic themes are relevant to the various National Outcomes.

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Key issues and risks 

Revenue Scotland managed a number of risks and issues during 2021-22. The Board of Revenue Scotland was kept informed throughout and scrutinised and monitored progress in the management of these risks and issues. 

Staff wellbeing (and mitigating the impacts of the COVID-19 pandemic) remained a key focus for the organisation. This included the need to proactively manage the impact of positive COVID-19 testing amongst staff and to facilitate the return to office working as part of the wider approach to hybrid working. A project team was established to lead this activity over the last year, tasked with ensuring that health and wellbeing were central to the approach. This facilitated the maintenance of our service to taxpayers and their agents in the face of staff absences, and a safe return to office working, and ensured any potential for transmission has been limited as far as possible. As part of Revenue Scotland’s commitment to wellbeing, our Health and Wellbeing Group has delivered a number of wellbeing-related sessions to staff over the past financial year. These included: musculoskeletal awareness, work/life balance, hybrid working, healthy eating, the importance of taking breaks, and, mindfulness and mindful walking. Employee one-to-one consultations were conducted throughout the year to ensure staff were able to work from home safely. Display screen equipment (DSE) assessments were also carried out as part

Revenue Scotland works closely with its trade unions (TU) at all levels with the aim of making the organisation a healthier and safer place to work. This commitment is demonstrated through the inclusion of TU representation on the Health, Safety and Wellbeing Committee. 

In addition, a wider review of health, safety and wellbeing has been undertaken. This has resulted in significant progress against Revenue Scotland’s health and safety action plan. It has also ensured the right training has been put in place to support the return of staff to offices; for example, first aid and fire safety training. As part of this, Revenue Scotland has worked closely with Scottish Government colleagues to make the best use of the support available within the Scottish Government estate. 

In response to heightened alertness on cyber security threats and as a result of the wider geo-political context and an attack in December 2020 on our partner organisation SEPA, cyber security has been a key issue for the organisation over the last year. A desktop exercise was conducted to test the resilience of the organisation in the face of common attacks detailed by the National Cyber Security Centre. Action has been taken to further strengthen controls in this area based on the outcomes of this exercise and lessons learnt from the attack on SEPA. 

Other initiatives to address issues and mitigate risks included 

Tax solutions: A number of project teams were established throughout the year to provide various solutions to improve the service provided to taxpayers. These have included: a secure messaging service to enable prompt responses, proportionate measures to alleviate the burden on taxpayers potentially facing penalties for late returns or payments, and tailored support to taxpayers to submit lease review returns on time. 

Tax Assurance Group (TAG): TAG continues to meet regularly to discuss complex cases and operational changes. A key feature of 2021-22 was the approval of updated compliance plans, that detail how Revenue Scotland operates under an established risk management framework. The framework aligns with the best practice guidance presented through the Scottish Public Finance Manual and the Scottish Government’s Risk Management Guidance document. The framework sets out the process for identifying and documenting risk, assigning ownership of risk, scoring risk, determining responses to risk and monitoring and reporting on progress in managing risk. 

Learning and development: The Scottish Tax Education Programme (STEP) continued to thrive during 2021-22 with the delivery of the virtual foundation modules to many of the new staff who joined the organisation throughout the year. Development began on a number of specialist learning areas such as: corporate strategy, investigatory powers, styles, behavioural penalties and reviews and piloted modules relating to debt, Additional Dwelling Supplement (ADS) and leases. All this progress was supported by our training champions, who have embraced new technology such as the use of Mentimeter, Canva and MS Teams to further improve learner engagement and experience. 98% of attendees confirm that attending STEP has improved their skills and knowledge. 

Wellbeing: We have continued to promote wellbeing and engagement across Revenue Scotland. Throughout the year we have continued to deliver a comprehensive induction programme for new staff. Approximately 35% of our workforce changed during 2021-22, this presented both opportunity and challenge. Connecting staff as one organisation continues to be a priority and we hosted two virtual all-staff gatherings during the year.

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Delivering legislative change 

2021-22 saw Revenue Scotland implement changes announced in the Scottish Budget to both LBTT and SLfT, taking effect from 1 April 2021. After a temporary change during the COVID-19 pandemic, the ceiling of the nil rate band for residential LBTT returned, as planned, to £145,000 for transactions as of 1 April 2021. Rates for the Additional Dwelling Supplement (ADS) and non-residential LBTT remain unchanged. The Scottish Budget 2021-22 also confirmed, and Revenue Scotland implemented, an increase in SLfT rates from 1 April 2021, as follows: 

 

Rate/Year	2021-22	2020-21
Standard rate per tonne	£96.70	£94.15
Lower rate per tonne	£3.10	£3.00

Revenue Scotland also actively collaborates with Scottish Government officials in the design and structure of possible future legislative change. This involvement, including consultations, during 2021-22 is likely to lead to further legislative change in 2022-23 and beyond. 

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Litigation 

In our Annual Report and Accounts for 2020-21, we reported on the impact of COVID-19 on our litigation. While in 2020-21 only four virtual tribunal hearings took place for devolved taxes, over the course of 2021-22, COVID-19 restrictions affecting litigation gradually eased. 

During 2021-22, Revenue Scotland participated in seven tribunal hearings, of which four were LBTT appeals and three were SLfT appeals. Three LBTT hearings and one SLfT hearing were conducted virtually. The remaining three hearings were held in person. 

For both virtual and in person proceedings, the tribunal directed electronic submission of documents. This resulted in a cost saving in relation to printing and posting for both parties. The technology and arrangements for virtual hearings has worked well and Revenue Scotland welcomes the availability of an alternative virtual format. There is a complex mix of factors which will impact which format is appropriate and Revenue Scotland is supportive of legal developments in this area. 

Since Revenue Scotland was established in 2015, we have been collecting data in relation to litigation. Trends are consistently showing higher volumes of LBTT appeals compared to SLfT appeals. There has also been an increase in the tribunal rejecting appeals seeking ADS repayment. 

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Future Operating Model

Early in 2021 the Chief Executive commissioned the Scottish Government Directorate for Internal Audit and Assurance (DIAA) to undertake a review of action taken during the pandemic. The positive report outcome led us to consider how the changes introduced as a result of working remotely could be considered as part of more permanent working arrangements. 

The Chief Executive commissioned consultancy firm EY to undertake a short piece of work to develop an options appraisal1 of three possible future operating models – fully remote, fully office-based and hybrid – against the following criteria: our service, our organisation, our people, scalability, value for money and green recovery. This aimed to enable us to 

determine what our optimal future operating model could be. It considered the case for change, the risks and the development of a principles-based hybrid operating model that could be evaluated. 

The key outcome sought was the operating model which produced the best business performance. Employee personas were developed to reflect our staff’s different preferences and needs with regards to office, home and hybrid working. They also accounted for the health, safety and 

wellbeing of individuals, and the implication on their preferred work setting. Additionally, role personas were identified; these were aimed at helping to define the distinct purpose of the workplace and when the employees would interact with the office. 

In June 2021 the Revenue Scotland Board committed to piloting a hybrid model for a year, which would be subject to quantitative and qualitative analysis. This will enable the organisation to determine its optimum hybrid operating model for 2023-24 and beyond. 

A futures project team was established to develop the options appraisal, participate in the scoring exercise and then take forward the planning required to implement the Board’s decision. The team developed three phases to introduce hybrid working. Phase one commenced in September 2021. This phase permitted staff with health and safety or wellbeing issues, or staff undertaking business- critical work, to return to our Victoria Quay office. A duty manager role was established to provide support to those staff returning. 

In March 2022 COVID-19 restrictions were further relaxed, and phase two of the trial invited staff who identified with a blend of home- and office-based persona to attend the office. As an organisation we collectively reviewed activities that could be optimised in the office and defined the office-based activities for which all staff would attend the office. The final phase of our hybrid pilot includes inviting all staff to attend the office for defined activities and sees the use of a hub site in Glasgow. In preparation for staff returning to the office, a health and safety inspection was carried out in conjunction with the trade unions, a hybrid staff handbook was developed, IT was refreshed, and office space repurposed to optimise the hybrid experience. The evaluation of the hybrid model of working will be evidence-based. Staff pulse surveys have been taken at regular intervals and a full evaluation will be undertaken at the end of the pilot in March 2023. 

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Performance summary

Key projects

Revenue Scotland’s Business Plan includes 10 key strategic projects for 2021-22, which represent a large investment and/or which are of strategic importance to the organisation

and contribute to the delivery of the Corporate Plan. At the end of 2021-22, most projects were either complete or continuing to progress.

Project and scope	Progress	Status
1. Scottish Budget changes To deliver changes to the devolved taxes through changes introduced to the Scottish Budget, ADS and SLfT provisions	No changes were made to LBTT bands; however, both the standard and lower rates of SLfT increased. The website was updated to reflect the new rates and operators have been contacted to inform them of the rate changes. Testing of our Scottish Electronic Tax System (SETS) was also completed to ensure that the system correctly reflected the changes.	Complete
2. LBTT legislative guidance To revise and refresh the external guidance, including legislative guidance for both devolved taxes, ensuring accessibility and stakeholder standards are met	Changes to guidance are ongoing.	Ongoing
3. Finance system renewal To renew the tax finance system contract and to explore a new system in 2022-23	The contract was successfully renewed with updated contract terms.	Complete
4. Remote printing project To develop, roll out and integrate a third-party printing solution as an element of our Target Operating Model	Project has been completed; all applicable business areas are now using the printing solution.	Complete
5. Development of learning experience platform Development of a Revenue Scotland learning experience platform which will sit within the SG Thrive platform. It will contain learning & development (L&D),Scottish Tax Education Programme (STEP) and provide a platform for staff to lead on their own L&D and build capability for the future.	Work on this project is ongoing; user testing has begun.	Ongoing
6. Enhanced support policy To develop a suitable policy and solutions for customers and staff who require varying levels of enhanced support or services	The policy has been split into an internal and external policy. Significant progress has been made but is still ongoing.	Ongoing
7. Capital Investment Programme To maintain Revenue Scotland’s programme of continuous improvement suggestions	Development and implementation of improvements are in progress	Ongoing
8. Analytical workbench Accessing Edinburgh University’s Analytical Workbench to provide data analytics ability, load testing, and functionality testing of SETS, to support the continuous improvement programme (related to Data Science Accelerator Programme)	Programme has concluded: findings were taken and further research by IT teams is being undertaken to develop similar solutions.	Complete
9. Implementation of Jira service desk To deliver a service and incident management tool to enable the management and provide visibility of and reporting of workflows and requirements	After a review of Jira, Scottish Government’s iFix service was implemented as a shared service pending a broader review of IT service management practices.	Complete
10. Annual Report and Accounts To produce the Annual Report and annual Accounts for the current financial year	The production of Annual Report and Accounts were completed for the applicable financial year. This process is annual.	Complete

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KPIs overview

The Corporate Plan 2021-24 includes 10 key performance indicators (KPIs) which

demonstrate Revenue Scotland’s performance against the plan and towards our targets.

Full details relating to each KPI and target can be found in the Performance Analysis section

of this Annual Report and page numbers are provided in the table.

The KPIs demonstrate our operational performance in the midst of the challenges associated

with the COVID-19 pandemic in 2021-22.

New KPIs were introduced in 2021-22 to monitor our performance against new priority

objectives, including work relating to equalities mainstreaming, service user feedback, and

progress towards becoming a greener organisation. Previous KPIs were also updated to

more accurately reflect our performance against key areas. For these reasons comparison

to previous years is not always available.

No.	Indicator	Target/Indicator	2021-22	2020-21	Status
1	Tax collection rate: Percentage of tax declared which has been collected	Comparison to 2017-18 baseline (99%)	99%	100%	Achieved
2	Response to user requests	Composite of calls, written correspondence and time to process claims for repayment of tax. Green – 95% Amber – <95% >90% Red – <90%	95%	N/A – New for this year	Achieved
3	Tax secured through Revenue Scotland’s compliance activity	Compared to previous year’s compliance activity, no formal target set	£721k	£963k	Not applicable
4	Administrative cost of tax collection	<1%	0.68%	1%	Achieved
5	Skills and knowledge development	>90% of staff having completed 30 hours (pro rata) learning and development	94%	N/A – New for this year	Achieved
6	People Survey Engagement and Stress Proxy Index	Combined score to be within top 25% of CS organisations	Combined score of 33	N/A – New for this year	Not achieved
7	Service users feedback	Developing KPI definition and measure	N/A	N/A – New for this year	In development*
8	Equalities	RAG status applied based on progress against Equalities Mainstreaming action plan	Amber	N/A – New for this year	Partially achieved
9	Environment	Developing KPI definition and measure	N/A	N/A – New for this year	Removed**
10	Delivery of key strategic projects	Combined RAG status of 10 key strategic projects	Green	N/A – New for this year	Achieved

*In 2021-22 Revenue Scotland started gathering service user feedback via the online tax collection system SETS; this will continue during 2022-23 to set a benchmark.

**In May 2022, the Board agreed that KPI 9 was to be set aside, while a revised Green Strategy and environmental targets are to be considered in 2022-23.

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Financial performance

Resource accounts

The figures given below are the final budget (revenue and capital) after adjustment in the

Spring Budget review.

 

Net Expenditure against Resource Budget	Actual Total £'000	Budget Total £'000
Financial year 2021-22 expenditure	6,338	6,596
Financial year 2020-21 expenditure	6,233	6,600

 In 2021-22, revenue expenditure was £258,000 (4%) less than budget and capital expenditure

was £201,000 (40%) less than budget. Savings occurred in many areas as a result of pandemic

restrictions on office working. In particular:

• Scottish Government HR pressures and increased volumes of recruitment as a result of the pandemic contributed to delays in the recruitment process and the onboarding of new staff.
• Tax tribunal hearings and outcomes were postponed resulting in delays in incurring legal costs.
• Planned capital spend was delayed due to supply chain issues on the IT hardware refresh and a longer development process for upgrades to our tax collection platform SETS.

Development of SETS remains a priority for Revenue Scotland with significant expenditure

planned for the next few years.

In 2021-22 Revenue Scotland spent £67,000 (2020-21: £230,000) on costs associated with

our response to the COVID-19 pandemic. These were:

 COVID-19 expenditure in 2021-22 was greatly reduced from 2020-21 when some staff were

seconded to Scottish Government’s response to the pandemic and costs borne by Revenue

Scotland. In 2021-22 expenditure related to minor IT hardware and expenditure incurred with

management consultants to assess a range of operating models for Revenue Scotland as noted

above under Future Operating Model.

Devolved Taxes

The values in the above table are for tax returns and amendments submitted during 2021-22 and adjusted for the value of LBTT and SLfT returns received during April and May 2022 which relate to the period up to March 2022.