LBTT – Land and Buildings Transaction tax

Avatar photo

Gerry MacCrossan

LBTT – Land and Buildings Transaction tax

I know!  The accountancy world does not make it easy for you with all of these acronyms – ABC this, and EDF that….  Here we are referring to the additional dwelling supplement, covered by the land and buildings transaction tax.  This means if you buy an additional dwelling, such as holiday home or a buy-to-let property, there will be an additional tax liability.



In the December Scottish Parliament budget, Finance Secretary Derek Mackay proposed increasing the rate of ADS from 3% to 4% with effect from 25 January 2019.


ADS applies to most purchases of additional dwellings for over £40,000 by individuals in Scotland, although relief is available where the buyer is replacing their main residence. It also applies to the majority of purchases of residential property in Scotland by companies, partnerships, and certain trusts.


The impact of these proposed changes is illustrated below:

Example: ADS on a holiday home purchased for £250,000

Date 31 March 2016 1 April 2016 Proposed

25 Jan 2019

LBTT £2,100 £2,100 £2,100
ADS N/A £7,500 £10,000
Total £2,100 £9,600 £12,100


Where the date of purchase is on or after 25 January 2019 but the contract was entered into prior to 12 December 2018, the current ADS rate of 3% will continue to apply for.


LBTT for Commercial Property Transactions

The Scottish Government intends to reduce the lower rate of Land and Buildings Transaction Tax (“LBTT”) for non-residential property transactions, whilst increasing the cost for higher value property acquisitions. These changes are proposed to come into force from 25 January 2019, but will not apply if the contract for a transaction was entered into prior to 12 December 2018.


These measures align the top rate of LBTT with the top rate of Stamp Duty Land Tax which applies south of the border, with comparably lower tax for property transactions under £250,000.


LBTT non-residential property: proposed rates

Purchase price Current

24 Jan 2019


25 Jan 2019

Up to £150,000 0% 0%
£150,001 to £250,000 3% 1%
£250,001 to £350,000 3% 5%
Above £350,000 4.5% 5%


To put this in context: if these proposals are introduced, the purchase of commercial property for £250,000 will enjoy reduced LBTT of £1,000, down from £3,000, whereas a purchase at £350,000 will be neutral, and a purchase at £2m will attract additional LBTT of £8,250.