The Scottish Government has announced revised rates for residential properties under the new Land and Buildings Transaction Tax (LBTT). This replaces the Stamp Duty Land Tax (SDLT) in relation to residential property transactions in Scotland and comes into force from 1 April 2015.
Just after three months of presenting the LBTT, the Scottish Government has had to review its rates and bands in light of the overhaul to UK Stamp Duty announced in December by the Chancellor, George Osborne.
The original October plan meant LBTT should have been cheaper than stamp duty for 90% of homebuyers, with only those paying more than £325,000 for a property receiving a higher fee. However, the shakeup by the Chancellor undercut the Scottish Government’s version, lowering stamp duty for 98% of homebuyers, with only those paying more than £937,000 facing an increase.
The changes will mean that only 10% of people will pay more under LBTT than Stamp Duty.
The revised tax rates and bands are as follows:
Property 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%
- £750,001 and over 12%
The new LBTT rates in comparison to the new SDLT rates means that for property sales up to the value of £330,000, purchasers will pay less in Scotland than their counterparts South of the border. Above this level, LBTT becomes more expensive.
The new rates will be welcome news for most home buyers in Scotland, against the original proposed rates, but purchasers over the £330,000 band may still feel an injustice in stark contrast to purchasers South of the border.
The revised rates have been well received so far, however it’s still too early to tell what kind of impact such changes will have on the property market.