LBTT: a new Scottish property transactions tax - .PDF file.
Stamp duty land tax (SDLT) is to be replaced in Scotland by a new tax known as the Land and Buildings Transaction Tax (LBTT). LBTT is being introduced under the Land and Buildings Transaction Tax (Scotland) Act 2013, and will come into effect on 1 April 2015, irrespective of the results of the independence referendum. LBTT will apply to any transaction with an effective date occurring on or after 1 April 2015, pursuant to a contract entered into on or after 1 May 2012. Transactions occurring pursuant to earlier contracts will generally remain subject to SDLT.
SDLT operates on the basis that the same rate applies to the entire consideration for a transaction. For example, for commercial property, a transaction with a price of exactly £500,000 is subject to three per cent SDLT on the whole price, while a transaction with a price of £500,001 is subject to four per cent SDLT on the whole price. LBTT will operate on a different basis, and will be calculated in a similar manner to income tax. This means there will be progressive rates of LBTT, with each part of the purchase price being subject to LBTT at a different rate.
The actual rates of LBTT are not yet known and it is unlikely that they will be announced prior to September 2014. However, a consultation document that preceded the legislation provided example rates that will apply to Scottish property transactions. These rates may change, but they give an indication of the current thinking of the Scottish government. The rates set out in the consultation document were as follows…
If you are registered and logged in to the site, click on the link below to read the rest of the DLA Piper briefing. If not, please register or sign in with your details below.