Guidance on LBTT Exemptions for Civil Partnership Dissolution Transactions in Scotland

LBTT Exemption for Civil Partnership Dissolution

This page provides guidance on the exemption from Land and Buildings Transaction Tax (LBTT) for transactions resulting from the dissolution of a civil partnership. The exemption applies under specific conditions outlined by Revenue Scotland.

• Transactions must result from a court order or an agreement between parties.
• The exemption is specific to the dissolution of a civil partnership.
• LBTT3007 outlines the relevant legislative guidance.
• Key terms include civil partnership, dissolution, and exemption.

Understanding LBTT Exemptions for Civil Partnership Dissolutions

In Scotland, the Land and Buildings Transaction Tax (LBTT) is a tax applied to residential and non-residential land and property transactions. However, there are specific exemptions and reliefs available under certain circumstances. One such exemption applies to transactions resulting from the dissolution of a civil partnership. This article will explore the details of this exemption, providing clarity on how it works and who it benefits.

What is LBTT?

The Land and Buildings Transaction Tax is a tax that replaced the UK Stamp Duty Land Tax in Scotland on 1 April 2015. It is payable on the purchase of land or property over a certain price threshold. The tax is designed to be progressive, meaning that the rate of tax increases with the value of the property or land being purchased.

For more detailed information on LBTT, you can visit the official Revenue Scotland LBTT page.

Exemptions and Reliefs

There are several exemptions and reliefs available under the LBTT legislation. These are designed to ensure that the tax system is fair and does not place undue burden on individuals in specific situations. One such situation is the dissolution of a civil partnership.

What is a Civil Partnership?

A civil partnership is a legally recognised relationship between two people of the same sex or opposite sex. It provides similar rights and responsibilities to marriage. In Scotland, civil partnerships can be dissolved through a legal process, similar to divorce for married couples.

Exemption for Civil Partnership Dissolutions

When a civil partnership is dissolved, there may be a need to transfer property or land between the parties involved. Under normal circumstances, such a transfer would be subject to LBTT. However, there is an exemption available for transactions that occur as a result of a court order or an agreement between the parties following the dissolution of a civil partnership.

Conditions for the Exemption

For the exemption to apply, certain conditions must be met:

• The transaction must be directly connected to the dissolution of a civil partnership.
• The transfer of property or land must be ordered by a court or agreed upon by both parties as part of the dissolution process.
• The exemption applies only to the transfer of property or land between the partners involved in the dissolution.

These conditions ensure that the exemption is applied fairly and only in situations where it is genuinely warranted.

Practical Example

To better understand how this exemption works, consider the following example:

Jane and Alex are in a civil partnership and own a house together. Unfortunately, they decide to dissolve their partnership. As part of the dissolution process, they agree that Jane will take full ownership of the house, and Alex will receive a financial settlement. Normally, the transfer of Alex’s share of the house to Jane would incur LBTT. However, because this transfer is part of the dissolution agreement, it qualifies for the exemption, and no LBTT is payable.

Why is this Exemption Important?

This exemption is important because it recognises the unique circumstances surrounding the dissolution of a civil partnership. It ensures that individuals are not financially penalised during what can be a challenging time. By removing the burden of LBTT, the exemption allows for a smoother transition and fairer distribution of assets between the parties involved.

How to Claim the Exemption

Claiming the exemption involves providing the necessary documentation to Revenue Scotland. This typically includes evidence of the court order or agreement between the parties. It is advisable to seek legal advice to ensure that all requirements are met and that the exemption is applied correctly.

For more information on how to claim the exemption, you can visit the Revenue Scotland guidance page.

Conclusion

The LBTT exemption for transactions related to the dissolution of a civil partnership is a valuable provision that helps individuals navigate the financial aspects of ending a partnership. By understanding the conditions and process for claiming this exemption, individuals can ensure a fair and equitable resolution of their property and land matters.

For further reading and resources, consider exploring the following links:

• Scottish Government – Civil Partnerships
• Citizens Advice Scotland – Civil Partnerships
• mygov.scot – Civil Partnerships

Useful article? You may find it helpful to read the original guidance here: Guidance on LBTT Exemptions for Civil Partnership Dissolution Transactions in Scotland

View all LBTT Guidance Pages Here