We are often asked how much a house purchase is actually going to cost our clients when property tax is included. In Scotland there are two taxes that could be payable when purchasing a residential property.

1. Land and Building Transaction Tax  (LBTT)

The amount of LBTT you will be due to pay is dependent on the purchase price, with rates as follows:

Residential transactions

Purchase price up to £145,000: 0%
£145,001 to £250,000 : 2%
£250,001 - £325,000: 5%
£325,001 to £750,000: 10%
Over £750,000: 12%

The 2019 residential LBTT rates are set to remain the same, however non-residential transactions will see the lower rate reducing from 3% to 1% and increasing the upper rate from 4.5% to 5%. The starting threshold is also set to decrease from £350,000 to £250,000. These changes are due to come in to force from 25th January 2019, but the existing rate will be retained for transactions completing post 25th January 2019 where the contract was entered in to before 12th December 2018.

Non-residential transactions

Purchase price up to £150,000: non-residential LBTT rate 0%
£150,001 to £250,000: non-residential LBTT rate1%
Over £50,000: non-residential LBTT rate 5%

2. Additional Dwelling Supplement (ADS)

ADS is currently due on certain purchases of additional residential property with a price in excess of £40,000. This  “supplement” is payable in addition to LBTT (Land and Building Transaction Tax) – see above.

However, it was announced that from 25th January 2019, the ADS tax charge will increase from 3% to 4% on all property transactions. The 3% rate will be retained post 25th January 2019 for contracts entered into before 12th December 2018.

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