If you’ve been keeping an eye on the tax payable on new house purchases, you may know that in England the stamp duty holiday has been extended. The equivalent tax in Scotland, namely Land and Buildings Transaction Tax (‘LBTT’) attracted a nil rate band up to £250,000 until 31 March 2021, but this has not been extended.
New Land and Buildings Transaction Tax Rates
Accordingly, as of 1 April 2021, the new rates for Scotland are as follows: –
|Purchase price||LBTT rate|
|Up to £145,000||0%|
|£145,001 to £250,000||2%|
|£250,001 to £325,000||5%|
|£325,001 to £750,000||10%|
The purchase price of your new home will determine how much tax is payable. For example, if you are purchasing a house at £180,000, the tax payable will be £145,000 at 0% and £35,000 at 2%. You will, therefore, be due LBTT of £700. A house purchase of £150,000 would attract LBTT of £145,000 at 0% and £5,000 at 2% and the tax payable would be £100.
First-time Buyers Relief
If you are stepping onto the property ladder for the first time, then you may be eligible for ‘first-time buyers relief’. This relief raises the nil rate band to £175,000 and so a purchase of property of £180,000 will attract tax of £175,000 at 0% plus £5,000 at 2%. The total tax payable in this instance will be £100. A house purchase of £150,000 with first-time buyers relief would attract no tax.
First-time Buyers Relief Conditions
There are a number of conditions set by HMRC before first-time buyers relief can be claimed, which they summarise as follows: –
- the transaction is an acquisition of a major interest in land;
- the land consists entirely of residential property and includes a dwelling;
- the buyer is a first-time buyer who intends to occupy the dwelling as the buyer’s only or main residence;
- the transaction is not a linked transaction (see exception to this rule in the ‘Linked transaction’ section of this guidance); and
- the transaction is not one to which Additional Dwelling Supplement (“ADS”) applies (see LBTT10001)”
Importantly ALL purchasers must meet these conditions to allow relief to be claimed.
Our conveyancers can assist you in calculating how much LBTT will be payable on your new house purchase, which they will confirm at the outset of your transaction. You should also advise them if you own any other property so they can assess whether Additional Dwelling Supplement tax (‘ADS’) will also be payable.