What is LBTT?
Land and Buildings Transaction Tax, also known simply as LBTT, is the topic of discussion on this episode of ESPC's First-timers Club. Megan is joined by solicitor Gavin Pearson from Mov8 Real Estate, and the pair chat about what LBTT is and how it differs from stamp duty, as well as touching on tax relief for first-time buyers, calculating LBTT and what first-time buyers should consider when budgeting for LBTT.
Key points
What is LBTT?
Land and Buildings Transaction Tax (LBTT) is a tax paid by the purchaser when buying a property in Scotland. It replaced Stamp Duty in Scotland and is payable to Revenue Scotland, a separate tax authority from HMRC. Many people still refer to it as "Stamp Duty," but it is distinct in its structure and thresholds.
Thresholds and tax bands
For most buyers, LBTT becomes payable on properties priced above £145,000. First-time buyers benefit from a higher starting threshold of £175,000, making properties below this amount exempt. LBTT is calculated progressively in bands; for example, the portion between £175,000 and £250,000 is taxed at 2%, with higher bands taxed at increasing percentages.
First-time buyer relief
First-time buyers save up to £600 through a special tax relief, reducing their LBTT liability. This relief makes purchasing a home slightly more affordable for those entering the market for the first time, as opposed to those who have previously owned property.
Applicability to different property types
LBTT applies to the price stated in the title deed (disposition), regardless of whether the property is a new build or resale. For shared ownership properties, LBTT is calculated only on the share being purchased, not the full market value. In shared equity schemes like the LIFT program, buyers pay LBTT on the full property value, which differs from shared ownership.
Exclusions for extras in new builds
Optional upgrades in new builds, such as kitchen fittings or landscaping, are not included in the LBTT calculation. Buyers only pay LBTT on the property’s base price as recorded in the title deed, ensuring clarity on taxable costs.
Payment timing and process
LBTT is due at the moment of completion (date of entry), typically the day the keys are handed over. Solicitors are responsible for submitting the LBTT form and making payment to Revenue Scotland on behalf of the buyer. Buyers must pay their LBTT amount to the solicitor at least one working day before the completion date.
Budgeting considerations
Buyers need to account for LBTT when budgeting, as it cannot be included in a mortgage. It is an out-of-pocket expense that adds to other upfront costs, such as deposits, solicitor fees, and registration dues. Solicitors provide quotes to help buyers estimate these costs, but buyers should update these quotes if their property budget changes. You can also use our LBTT Calculator to estimate how much property tax you will pay.
Variations across price points
LBTT can vary significantly depending on the property price. For example, a £210,000 property incurs £500 in LBTT, but a £400,000 property results in £12,750, which is a considerable increase.