Guidance on LBTT Tax Relief for Building Societies’ Land Transactions

LBTT relief for building society mergers and transfers

Full relief from Land and Buildings Transaction Tax (LBTT) may apply where Scottish land is transferred because building societies are formally merging or one is taking over another’s engagements under the Building Societies Act 1986. This relief is narrow and only applies where the land transaction is directly caused by, or happens as a result of, the specific statutory process, and it must be claimed through the LBTT return.

• The relief covers land transactions linked to a section 93 amalgamation or a section 94 transfer of engagements under the Building Societies Act 1986.
• It applies only to a building society within the statutory meaning in that Act.
• The land transfer must be “effected by or in consequence of” the statutory merger or transfer, not just connected in a loose commercial way.
• It is not a general exemption for all property purchases by building societies, such as an ordinary later purchase of Scottish property.
• In practice, the key issues are whether the facts fit the statutory process exactly and whether the relief is properly claimed in the LBTT return.

Scroll down for the full analysis.

LBTT relief for building society amalgamations and transfers of engagements

This page explains a narrow but important LBTT relief for land transactions involving building societies in Scotland. Where the transaction happens because building societies are formally combining or one society is taking over another’s engagements under the Building Societies Act 1986, the transaction can be fully relieved from LBTT. The key point is that the relief applies only in specific statutory situations.

What this rule is about

LBTT is normally charged on chargeable land transactions in Scotland. But some transactions are relieved because they are part of a wider legal reorganisation rather than an ordinary purchase.

This relief covers certain transactions involving building societies. It is aimed at cases where land changes hands because building societies are being merged or reorganised under the statutory procedures in the Building Societies Act 1986.

In this context, “building society” has the meaning given by section 119(1) of the Building Societies Act 1986. The source material states that this means a building society incorporated, or treated as incorporated, under that Act.

What the official source says

The official guidance says that full relief is available for a land transaction “effected by or in consequence of” either of the following:

• an amalgamation of two or more building societies under section 93 of the Building Societies Act 1986, or
• a transfer of engagements between building societies under section 94 of that Act.

The relief is provided by schedule 13B to the Land and Buildings Transaction Tax (Scotland) Act 2013, inserted by the Land and Buildings Transaction Tax (Addition and Modification of Reliefs) (Scotland) Order 2015.

The wording matters. The transaction must not merely involve a building society in some loose commercial sense. It must be connected to one of the specified statutory processes, and the connection must be strong enough that the transaction is effected by that process or occurs in consequence of it.

What this means in practice

If land in Scotland is transferred as part of a qualifying amalgamation or transfer of engagements between building societies, LBTT may not be payable on that land transaction because full relief can be claimed.

This is most likely to matter where:

• property held by one building society passes to another as part of a formal merger, or
• land transfers because one building society takes over another’s business under the statutory transfer of engagements procedure.

The relief is not described as a general exemption for any transaction involving a building society. It is targeted at statutory restructuring events under sections 93 or 94 of the 1986 Act.

The source also indicates that the relief must be claimed. In practice, that means the transaction should be considered when preparing the LBTT return, and the claim should be made in the way Revenue Scotland requires for LBTT returns.

How to analyse it

A sensible way to analyse the point is to ask these questions:

• Is there a land transaction in Scotland that would otherwise fall within LBTT?
• Is a party to the transaction a “building society” within the statutory meaning?
• Is the wider event an amalgamation under section 93 of the Building Societies Act 1986, or a transfer of engagements under section 94?
• Was the land transaction effected by that event, or did it happen in consequence of it?
• Has the relief been properly claimed in the LBTT return process?

The most important question will often be the link between the land transaction and the statutory event. The wording suggests that the transaction must arise from the amalgamation or transfer of engagements itself, not simply happen around the same time.

Example

Illustration: Building Society A and Building Society B complete a statutory amalgamation under section 93 of the Building Societies Act 1986. As part of that amalgamation, Scottish property used by one society passes to the successor society. If the land transaction is effected by, or occurs in consequence of, that statutory amalgamation, the source material indicates that full LBTT relief can be claimed.

By contrast, if a building society later buys an unrelated Scottish property in an ordinary commercial purchase, this relief would not apply merely because the buyer is a building society.

Why this can be difficult in practice

The official material is brief, and the main difficulty is usually not the existence of the relief but whether the facts fit it exactly.

In particular:

• The relief depends on the transaction being tied to a statutory amalgamation or transfer of engagements. A commercial reorganisation that does not use those statutory routes may fall outside the relief.
• The phrase “effected by or in consequence of” can require careful factual analysis. Some transfers are clearly integral to the statutory event; others may be more remote.
• The guidance does not set out detailed evidence requirements on this page, so in practice the transaction documents and the statutory process under the 1986 Act are likely to be important.

So the legal form of the reorganisation matters, not just its commercial substance.

Key takeaways

• There is full LBTT relief for certain land transactions involving building societies, but only in specific statutory situations.
• The relief applies where the transaction is effected by or in consequence of a section 93 amalgamation or a section 94 transfer of engagements under the Building Societies Act 1986.
• It is not a general relief for all property transactions involving building societies, and it must be claimed through the LBTT return process.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on LBTT Tax Relief for Building Societies’ Land Transactions

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