Scottish property system Land and Buildings Transaction Tax (LBTT)

LBTT

Buy-to-let investors and those buying second homes are subject to a 3% LBTT surcharge

If you're buying a property in Scotland, you'll usually have to pay Land and Buildings Transaction Tax (LBTT). Here's our guide to how it works.

LBTT replaced Stamp Duty Land Tax (SDLT) in Scotland in April 2015, and while the price bands differ, the system works in much the same way.

How much LBTT you have to pay depends on both the purchase price and what you're using the property for.

If you buy a home that you intend to live in as your primary residence for over £145,000, or a buy-to-let property or second home for over £40,000, you'll need to pay LBTT. 

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LBTT rates for primary residences

If you buy a home for over £145,000 as a primary residence (ie you'll be living in it for the majority of the time), you'll need to pay LBTT. The amount you have to pay will depend on the overall purchase price.

LBTT is tiered, which means you'll pay different percentage rates on different 'portions' of the property price, as outlined in the table below:

Land and Buildings Transaction Tax rates
Portion of property priceRate
£0-£145,0000%
£145,001-£250,0002%
£250,001-£325,0005%
£325,001-£750,00010%
£750,001+12%


Here's an example of how it works:

  • Property price: £275,000
  • Portion 1: £0 - £145,000 = 0% tax  
  • Portion 2: £145,000.01 - £250,000 = 2% tax (£2,100)
  • Portion 3: £250,000.01 - £275,000 = 5% tax (£1,250)
  • Total paid = £278,350 (including £3,350 LBTT)

Find out more: check out the rates in England and Wales with our stamp duty guide

LBTT on buy-to-let and second homes

As of April 2016, new rates of LBTT apply to properties bought as buy-to-let investments, second homes or holiday homes, with an additional 3% applicable on properties costing over £40,000. The rates are detailed in the table below:

Land and Buildings Transaction Tax rates
Portion of property priceRate
£0-£40,000a0%
£0-£145,000b3%
£145,001-£250,0005%
£250,001-£325,0008%
£325,001-£750,00013%
£750,001+15%
a If total property price is £40,000 or less
b If total property price is over £40,000
Rates also apply to second homes and holiday homes

So, if you're buying a property for £275,000 as an investment or a second home, it works like this:

  • Property price: £275,000
  • Portion 1: £0 - £145,000 = 3% tax (£4,350)  
  • Portion 2: £145,000.01 - £250,000 = 5% tax (£5,250)
  • Portion 3: £250,000.01 - £275,000 = 8% tax (£2,000)
  • Total paid = £286,600 (including £11,600 LBTT)

Find out more: check out how the tiers differ in England and Wales with our guide to buy-to-let stamp duty

More on this:

Last updated:

April 2016

Updated by:

Stephen Maunder

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