This guide / blog is for general information only and does not constitute individual advice. Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it. Miller Homes cannot advise you on a mortgage, please consult an independent mortgage adviser for any personalised illustrations. You should seek independent legal and financial advice on any tax implications of purchasing a property.

Whether you’re looking to relocate, upsize or downsize, there is a lot to factor into your budget when moving home. For homebuyers in Scotland, one of the most important things is the Land and Buildings Transaction Tax (LBTT) – but what exactly is it, who needs to pay, and how much is it?

What is LBTT?

LBTT is tax that you pay to the Scottish Government when buying a new home or any land in Scotland. You normally pay it on properties that cost over £145,000 and the amount that you pay is a percentage based on the purchase price of your new home.

Without this payment you won’t receive your certificate from Revenue Scotland to record the change in ownership of the property and legally register it.  

First-time buyers will normally get relief on their LBTT, but for those who are looking to buy an additional property (e.g. a holiday home or buy-to-let), you will have to pay an Additional Dwelling Supplement.

LBTT only applies in Scotland. If you are purchasing a home in England or Norther Ireland, you will pay Stamp Duty Land Tax (SBLT) on properties with a purchase price of more than £125,000, while in Wales a Land Transaction Tax applies to properties with a purchase price of over £225,000. 

Do you pay LBTT on a new build?

LBTT is paid on all residential properties that cost more than £145,000. However, the amount you pay depends on the property price and when you purchase it. The Government may increase the rate or introduce a new relief scheme, so it’s important to do your research and seek independent legal and financial advice on the tax implications of purchasing a property.

Revenue Scotland defines residential buildings as:

• Used or suitable to use as a dwelling

• Dwellings in the process of being built

• Buildings that are being adapted to use as a home

If you're a first-time buyer, you will be eligible for a discount, or if the home has been transferred to you as a result of a divorce, you will be exempt from paying.

How much is LBTT?

LBTT is an upfront cost that you make after you purchase your new home. The amount you pay depends on the purchase price, but generally – the higher the property price, the more LBTT you pay.

The standard LBTT rates are:

Chargeable consideration is important to take into account. For example, if you’re purchasing a new home, the first £145,000 will be free from any LBTT, but any amount after this will be charged at the rate of the purchase price. So, if your property price is £150,000, you will have to pay LBTT on the remaining £5,000 at a rate of 2%.

You can use our free Stamp Duty / LBTT / LTT calculator to get a quick, personalised estimate of what you’ll owe on your purchase.

LBTT as a first time buyer

For first time buyers, the Scottish Government has introduced tax relief on LBTT, which means you only pay LBTT if a property is priced over £175,000. This equates to relief of £600, which can be claimed provided your new home will be your main residence.

Additional Dwelling Supplement

If you’re thinking about buying a second home to rent out or use as a holiday home, keep in mind that you may have to pay an Additional Dwelling Supplement (ADS). From December 2022, the rate increased to 6% and it’s paid as an extra cost on top of the standard LBTT rate.

The LBTT rate for an Additional Dwelling Supplement is:

How to pay LBTT?

Usually your solicitor or conveyancer will handle the process for you, but you can also do it yourself. To pay your LBTT, you need to submit a return and you then have 30 days to make the payment. It’s vital that you pay as soon as you can to avoid any penalties or interest. Unlike Stamp Duty in England and Northern Ireland, if you’re below the LBTT threshold of £145,000, you may still have to submit a return even if you don’t need to make a payment.

Before going ahead with your new build purchase, start with a clear idea of your budget and be aware of additional costs like LBTT.

Next steps for your move

Browse our latest developments across the UK today to discover your new home, or visit our Stamp Duty / LBTT / LTT calculator to get an indication of how much tax you’ll need to pay.