The date at which the liability to LBTT arises (the tax point) is known as the effective date of the transaction. The effective date is also used to determine when other obligations in relation to the tax must be fulfilled, for example when a LBTT return must be made.
In the majority of cases the effective date of a land transaction is the date that the land transaction is completed (in other words the date of settlement or, in the case of a lease, the date when it is executed by the parties or constituted by any other means).
In a standard house purchase, the date of settlement is the date that the purchase price is paid by the buyer in exchange for the seller delivering the keys and disposition.
Circumstances where the effective date of a land transaction is not the date that the land transaction is completed include:
- substantial performance of a contract without completion - see LBTT1005;
- substantial performance of a contract requiring conveyance to a third party - see LBTT1006; and
- options and rights of pre-emption – see LBTT1007.
For further guidance on the effective date for land transactions involving leases see LBTT6002 - Key concepts | Revenue Scotland.
If the contract is conditional (i.e. subject to suspensive conditions), the contract date will usually still be taken as the date that the conditional contract was entered into/signed. This is because a binding contract has been entered into at this point. Where we believe this rule may have been abused, we will make contact with the relevant parties to ascertain if the return needs to be amended and any additional tax paid.