Do you pay LBTT or ADS when buying a one-third share in a Scottish property for £35,000?

Introduction

People often search for this issue when a family member wants to buy into an existing property in Scotland, especially where the buyer already owns their own home. The usual concern is whether Land and Buildings Transaction Tax (LBTT) is due, whether the Additional Dwelling Supplement (ADS) applies, and whether the tax is worked out on the full value of the property or only on the share being acquired.

In the scenario considered here, the proposed buyer would pay £35,000 for a one-third interest in a let residential property worth about £105,000. The key point is that, for LBTT purposes, tax is generally based on the chargeable consideration actually given for the transaction, not automatically on the full market value of the whole property.

The Question

A parent is considering paying £35,000 to acquire a one-third share in an adult child’s residential property in Scotland. The property is now let to a tenant, and the parent would then receive a share of the rental income.

The parent already owns their own home and wants to know:

• whether LBTT would be payable on the transaction;
• whether ADS would apply because they already own another dwelling;
• whether tax would be calculated on the full property value of about £105,000 or only on the £35,000 share being acquired; and
• whether the under-£40,000 rule prevents any LBTT or ADS charge.

Nick’s Explanation

Nick’s core point was that LBTT is only charged where there is chargeable consideration, and in this kind of case the relevant consideration is the amount actually being given for the share.

In anonymised form, his explanation was:

“LBTT is only payable if there is consideration and it exceeds £40,000. In this context, consideration means money or money’s worth. Here, the consideration is £35,000, which is below the £40,000 threshold for notifying Revenue Scotland of the transaction. On that basis, I would not expect any LBTT liability.”

He also made clear that the ownership structure itself, such as whether the arrangement is documented by transfer of title or by a trust document, is a conveyancing matter for the acting solicitor.

The Law

LBTT is charged under the Land and Buildings Transaction Tax (Scotland) Act 2013 on chargeable land transactions in Scotland. The amount of tax depends on the chargeable consideration given for the transaction.

For ordinary transactions, “chargeable consideration” means money or money’s worth given for the acquisition. If a person pays £35,000 for a one-third interest, that £35,000 is normally the starting point for the LBTT analysis.

There is also a notification threshold. Broadly, where chargeable consideration does not exceed £40,000, the transaction is generally not notifiable and no LBTT return is normally required.

ADS is the supplement that can apply to purchases of additional dwellings in Scotland. However, the legislation contains a low-value rule. Where the chargeable consideration attributable to the dwelling transaction is £40,000 or less, ADS is generally not in point.

That means the £40,000 threshold matters not only for ordinary LBTT reporting, but also when considering whether a low-value acquisition of an additional dwelling interest triggers ADS.

Analysis

The tax analysis can be broken down into a few steps.

1. Identify what is being acquired.

   The buyer is not acquiring the whole property. They are acquiring a one-third share.

2. Identify the consideration for that acquisition.

   The proposed payment is £35,000. On the facts given, that is the relevant chargeable consideration.

3. Apply the LBTT threshold.

   Because the consideration is £35,000, it falls below the £40,000 threshold referred to in Revenue Scotland guidance for notifiable transactions. On that basis, no LBTT would normally be payable.

4. Consider ADS separately.

   The buyer already owns another dwelling, so it is sensible to ask whether ADS could apply. But the same practical point matters here: if the chargeable consideration for the acquired interest is £35,000, that is below the £40,000 level at which the additional dwelling rules would usually become relevant. So, on these facts, ADS should not normally be due.

5. Check whether any debt is being taken on.

   This is important. If the buyer were also assuming liability for part of an existing mortgage, that assumed debt could count as chargeable consideration. In some transactions, this can increase the total consideration above the cash payment alone. In the scenario presented, it was said that the owner intended to clear the mortgage and own the property outright. If that is done before the transfer, it supports the conclusion that the consideration is simply £35,000.

6. Separate LBTT from other taxes.

   LBTT and ADS are transaction taxes on the acquisition. Capital gains tax is a different issue. A disposal of a share in a property can potentially have capital gains tax consequences for the seller, depending on whether the property qualifies for any reliefs. That is a separate analysis from LBTT.

So the answer to the practical question “is tax charged on £105,000 or on £35,000?” is: on these facts, the relevant figure is £35,000, being the consideration for the share acquired, not the value of the whole property.

Outcome

On the facts described, a payment of £35,000 for a one-third share in a Scottish residential property would not usually give rise to LBTT or ADS, because the relevant chargeable consideration is £35,000 and that is below the £40,000 threshold.

The likely practical conclusion is therefore:

• no LBTT should be payable;
• no LBTT return should normally be required; and
• ADS should not normally apply if the chargeable consideration for the acquired share is only £35,000.

That conclusion assumes there is no additional chargeable consideration, such as the buyer taking over part of a mortgage or giving some other form of money’s worth.

Practical Steps

• Ask the conveyancing solicitor to confirm exactly what interest is being transferred and what document will be used.
• Check whether any mortgage will remain in place at the point of transfer, and whether the incoming co-owner will assume any part of that debt.
• Confirm the total chargeable consideration, including any cash payment and any debt taken on.
• Ask the solicitor to confirm whether the transaction is notifiable to Revenue Scotland.
• Take separate advice on capital gains tax for the person giving up the share, because that is a different tax question from LBTT.
• Keep a clear written record of the agreed ownership shares and entitlement to rental income.

Conclusion

Where a person buys only a one-third share in a Scottish property for £35,000, the starting point for LBTT and ADS is the £35,000 consideration actually given. If that is the full consideration and no debt is assumed, the transaction should usually fall below the £40,000 threshold, so neither LBTT nor ADS should normally be due.

Legal References Used

• Land and Buildings Transaction Tax (Scotland) Act 2013
• Revenue Scotland, LBTT guidance on notifiable transactions: LBTT4003
• Revenue Scotland, LBTT guidance on chargeable consideration: LBTT2002

This page was last updated on 22 March 2026.

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