LBTT Guidance: Exemption for Land Transactions with No Chargeable Consideration

LBTT on Gifts of Property with No Chargeable Consideration

A gift of Scottish property can be exempt from LBTT if the buyer gives nothing in return. This means no cash, no item of monetary value, and no assumption of debt such as a mortgage. The exemption can also be disapplied in some transactions involving companies and connected parties.

• LBTT is based on chargeable consideration, so a genuine gift with nothing given in return is normally exempt.
• If the buyer takes on a mortgage or other existing debt, that debt counts as chargeable consideration for LBTT.
• Calling a transfer a gift does not by itself make it exempt; the legal and financial arrangements must be checked.
• The exemption does not apply in certain cases where the buyer is a company and the seller is connected with it.
• The exemption may also be lost if part of the consideration involves shares in a company connected with the seller.
• In practice, you should check for any money paid, anything of value given, any debt assumed, and whether special company connection rules apply.

Scroll down for the full analysis.

LBTT and gifts of property: when there is no chargeable consideration

This page explains when a land transaction is outside the charge to Land and Buildings Transaction Tax because nothing of monetary value is given in return. The basic idea is simple: if land is genuinely given away and the buyer gives no money, no money’s worth, and takes on no debt, the transaction is exempt. The position changes if the buyer assumes a mortgage or if special company rules apply.

What this rule is about

LBTT is charged by reference to chargeable consideration. In broad terms, that means something of monetary value given for the land. A straightforward gift of property may therefore fall outside the charge if the buyer gives nothing in return.

This matters because not every transfer of land is a taxable purchase. A transfer can still be a land transaction even if no price is paid. The question is whether there is any chargeable consideration. If there is none, the transaction is exempt under schedule 1 paragraph 1 of the Land and Buildings Transaction Tax (Scotland) Act 2013.

What the official source says

The official guidance says that where land or buildings are gifted, or ownership is transferred for no chargeable consideration, the transaction is exempt from LBTT. It explains that this means no money changes hands, no money’s worth is given, and there is no other consideration with a monetary value.

The guidance also makes an important qualification. If the buyer receives the property as a gift but also takes on existing debt, that assumed debt counts as chargeable consideration. The example given is liability under a mortgage. In that situation, the transaction is not a no-consideration gift for LBTT purposes.

There is also a specific exclusion from the exemption for certain company transactions. The exemption does not apply if the buyer is a company and either:

• the seller is connected with the buyer, whether the seller is an individual or a company, or
• some or all of the consideration consists of the issue or transfer of shares in a company with which the seller is connected.

The source refers to separate guidance on assumed debt and on these connected-company rules.

What this means in practice

A genuine gift of property can be exempt from LBTT, but only if the buyer gives nothing of value in return.

In practice, the first thing to check is whether the buyer is taking the property subject to any mortgage or other debt. If they are, the amount of debt assumed is treated as chargeable consideration. That can bring the transaction into LBTT even though no cash price is paid.

This is a common point of misunderstanding. People often describe a transfer as a “gift” because no money is paid to the transferor. For LBTT, that description is not enough. If the buyer takes on a secured loan, indemnifies the seller against it, or otherwise assumes a monetary liability, there may still be chargeable consideration.

The special company rule is another trap. Even where there appears to be no consideration, the exemption can be switched off if the buyer is a company and the seller is connected with it, or where shares connected with the seller form part of the consideration. That means connected-party transfers into companies need particular care.

How to analyse it

A sensible way to approach the issue is to ask these questions:

• Is there a land transaction at all? A transfer of ownership or other relevant interest in land will usually be one.
• Is any money being paid by the buyer, directly or indirectly?
• Is the buyer giving anything else with monetary value?
• Is the buyer assuming any existing debt, especially a mortgage secured on the property?
• Is the buyer a company?
• If the buyer is a company, is the seller connected with it, or does the arrangement involve shares in a connected company?

If the answer to the money, money’s worth, and debt questions is genuinely no, the exemption for no chargeable consideration may apply. If debt is assumed, that debt needs to be considered as chargeable consideration. If a company is involved, the connected-company exclusion must also be checked.

Example

Illustration: A parent transfers a house in Scotland to an adult child and no payment is made. If the property is mortgage-free and the child gives nothing in return, the transfer is a transaction with no chargeable consideration and is exempt from LBTT.

Change the facts slightly. The same house is transferred, still with no cash payment, but the child takes over responsibility for the existing mortgage. In that case, the assumed mortgage debt is chargeable consideration for LBTT purposes. The transfer is no longer simply an exempt gift.

Why this can be difficult in practice

The main difficulty is that ordinary language and tax language do not always match. A transfer may be called a gift in everyday terms, but still involve chargeable consideration for LBTT because the buyer assumes debt.

Another practical difficulty is identifying what counts as the buyer taking on a liability. The source specifically mentions assuming existing debt such as a mortgage, but the underlying issue is whether something of monetary value is being given or undertaken by the buyer.

Company cases can also be fact-sensitive. The source states that the exemption does not apply in certain connected-company situations, but whether parties are connected, and whether shares form part of the consideration in the relevant way, may require careful analysis of the wider arrangement.

Key takeaways

• A transfer of land can be exempt from LBTT if there is genuinely no chargeable consideration.
• If the buyer assumes a mortgage or other existing debt, that assumed debt counts as chargeable consideration.
• The no-consideration exemption does not apply in certain cases where the buyer is a company and connected-party or share-based consideration rules are engaged.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: LBTT Guidance: Exemption for Land Transactions with No Chargeable Consideration

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