Scottish Stamp Duty Holiday: How Did LBTT Change and When Did it End?

06 April 2021

Following England and Northern Ireland’s announcement of their Stamp Duty Holiday the Scottish Government confirmed that they would be temporarily raising the nil LBTT threshold from £145,000 to £250,000 on 15th July 2020. However, this LBTT holiday came to an end in Scotland on 31st March, meaning the zero tax threshold has dropped from £250,000 back to £145,000.  First time buyers will benefit from a nil tax threshold of £175,000, as they did prior to the 15th July 2020.

Rishi Sunak, UK Chancellor of the Exchequer,  announced an extension of the Stamp Duty holiday in England and Northern Ireland from the end of March until the end of June in his Budget announcement on 3rd March. However, this would not apply to Scotland - the LBTT reduction ended on 31st March as planned. 

Here are some commonly asked questions about LBTT and what this change means for you..

What is LBTT?

Land and Building Transaction Tax (LBTT) is Scotland’s version of stamp duty. This property tax is applied to residential and commercial property purchases in Scotland.

How much is LBTT in Scotland?

The amount of LBTT paid on a residential property transaction depends on the property selling price. There are various LBTT bands, with a different percentage of tax applied to each band.

In July 2020, the Scottish Government raised the nil tax threshold from £145,000 to £250,000 for residential property transactions but all the percentages for the other bands remained the same. The table below shows how much LBTT was payable on residential property transactions for the different bands, both before and after 15th July 2020.

How much more LBTT will I have to pay now that I'm purchasing after 31st March 2021?

The change to LBTT on 15th July 2020 meant those purchasing a property under £250,000 did not have to pay LBTT, unless purchasing a second home in which case, the 4% Additional Dwelling Supplement applies.

Those who purchased a property over £250,000 after 15th July 2020, only paid LBTT on the amount over £250,000. Raising the 0% threshold from £145,000 to £250,000 meant people purchasing a property over £250,000 saved up to £2,100 on LBTT.

As the LBTT reduction came to an end on 31st March 2021, from 1st April the zero tax threshold dropped back to £145,000 meaning buyers will have to pay up to £2,100 more for a property purchase, in comparison to those who bought during the LBTT holiday. However, first time buyers will benefit from tax relief up to £175,000, saving them up to £600 compared to other buyers. This means they will only have to pay up to an extra £1,500.

I’m a first time buyer – how does the change in LBTT affect me?

Prior to the 15th July 2020, first time buyers benefited from 0% LBTT up to £175,000 as opposed to £145,000. This meant they could save an additional £600 compared to other buyers

When the LBTT holiday was in place, first time buyers (along with all other buyers) benefited from a higher nil tax threshold of £250,000. This meant first time buyers could save up to an extra £1,500 on LBTT on property purchases from 15th July 2020 to 31st March 2021.

However, this LBTT reduction came to an end on 31st March 2021 as planned. After this date, first time buyers will still benefit from a zero tax threshold of £175,000 instead of £145,000, saving them up to £600 on property purchases compared to other buyers. 

What about the Additional Dwelling Supplement?

The Additional Dwelling Supplement (ADS) is a 4% surcharge which applies to second home purchases. This charge still applied on transactions between 15th July 2020 and 31st March 2021, and continues to apply now that the LBTT holiday has finished. 

This means if you are purchasing a residential property and already own a home, you will be required to pay the 4% ADS charge. If you are planning to sell your original property, you can claim the ADS amount back provided you sell within 18 months.