There was a threshold change announced in July 2020 that meant fewer people would have to pay Land and Buildings Transaction Tax (LBTT), and those who did would pay less. That's changing soon. So what does that mean if you're looking to buy? Here's an explainer from our experts.
What is LBTT and who pays it?
LBTT is a tiered tax. This means you pay different rates on different portions of the property price when you buy a home.
The thresholds at the moment are —
- 0% up to £250,000
- 5% above £250,000 to £325,000
- 10% above £325,000 to £750,000
- 12% over £750,000
Until 2015, when LBTT was introduced, people purchasing properties in Scotland paid Stamp Duty Land Tax (SDLT).
How much is LBTT?
Since July 2020, buyers in Scotland have been able to save up to £2,100 in LBTT.
For a limited time, rather than kicking in on purchases over £145,000, the change to the regime means now you only pay tax when you buy a new home for more than a quarter of a million pounds.
And even if you buy a new flat or house for more than £250,000, you’ll still save £2,100 on the tax. Money we can all spend elsewhere when we’re moving home, right?
As ever, there’s a catch. The threshold change ends on 31 March. So it pays to move now.
Our LBTT perspective
Between 15 July and 11 December people bought 271 properties through us.
Thirty-five percent (95) of all those sales were in the £145,000 to £250,000 bracket, so those clients paid no LBTT. They would have done before the regime changed, and would pay again after 31 March.
Forty-two percent (115) were above £250,000.
Those buyers saved £2,100 on the tax.
That represents a combined saving of almost a quarter of a million pounds: the equivalent price of, for example, a two-bed executive apartment in Aberdeen city centre, or a four-bed home in Aberdeenshire.
We have more than 150 flats and houses currently for sale where you won’t pay LBTT, but will after 31 March.
There’s around the same number on the market for above £250,000. Here you’ll save £2,100 on the tax until the threshold changes back.
Why do I pay LBTT?
The change in a property’s ownership in Scotland must be registered at the Land Register. One of the compulsory checks the register makes before proceeding with this is that the necessary return has been made to Revenue Scotland and, where applicable, the necessary LBTT has been paid.
If this hasn’t happened, the registration won’t take place.
Whether it’s your first time, or you’ve been through this before, we’re on hand to keep things simple.
There’s a short time left to pay less LBTT and we’re with you right through the process, including managing your payment to Revenue Scotland.
Plus, our independent mortgage experts offer free advice, and they’ll check the whole market to find a deal that suits.
So, if you want to pay less tax on a property you love, we can help. To find out more, give us a call on 01224 632500.