Welsh Revenue Authority LTT: Claim Refund for Higher Rate Land Transaction Tax After Selling Previous Home

This webpage provides guidance on claiming a refund for Land Transaction Tax (LTT) paid at a higher rate after selling your previous main residence.

• It explains the eligibility criteria for claiming the refund.
• Details the process for submitting a claim.
• Offers information on the necessary documentation required.
• Provides contact details for further assistance.
• Includes links to the page in both English and Welsh.

Understanding Land and Buildings Transaction Tax (LBTT) in Scotland

Land and Buildings Transaction Tax (LBTT) is a tax applied to residential and commercial land and buildings transactions in Scotland. It replaced the UK Stamp Duty Land Tax (SDLT) in Scotland on 1 April 2015. This article aims to provide a comprehensive overview of LBTT, including how it works, who it affects, and how it compares to similar taxes in other parts of the UK.

What is LBTT?

LBTT is a progressive tax, which means the amount of tax you pay increases with the price of the property. It applies to both residential and non-residential transactions, including leases. The tax is paid by the buyer and is usually handled by the solicitor as part of the conveyancing process.

Residential LBTT Rates

For residential properties, LBTT is calculated based on a series of bands. Each band has a different tax rate, and you only pay the higher rate on the portion of the property price that falls within each band. Here is a breakdown of the current residential LBTT rates:

• Up to £145,000: 0%
• £145,001 to £250,000: 2%
• £250,001 to £325,000: 5%
• £325,001 to £750,000: 10%
• Over £750,000: 12%

For example, if you purchase a home for £300,000, you would pay:

• 0% on the first £145,000
• 2% on the next £105,000 (£145,001 to £250,000)
• 5% on the remaining £50,000 (£250,001 to £300,000)

This results in a total LBTT of £4,600.

Non-Residential LBTT Rates

For non-residential properties, the rates and bands are different:

• Up to £150,000: 0%
• £150,001 to £250,000: 1%
• Over £250,000: 5%

For example, if you purchase a commercial property for £400,000, you would pay:

• 0% on the first £150,000
• 1% on the next £100,000 (£150,001 to £250,000)
• 5% on the remaining £150,000 (£250,001 to £400,000)

This results in a total LBTT of £9,500.

Additional Dwelling Supplement (ADS)

The Additional Dwelling Supplement (ADS) is an extra charge on purchases of additional residential properties, such as buy-to-let properties or second homes. The ADS is 4% of the total purchase price and is payable in addition to the standard LBTT rates.

For example, if you buy a second home for £200,000, you would pay the standard LBTT of £1,100 (2% on £55,000) plus an ADS of £8,000 (4% of £200,000), resulting in a total tax bill of £9,100.

Claiming a Refund

If you sell your previous main residence within 18 months of purchasing a new one, you may be eligible for a refund of the ADS. To claim a refund, you must apply to Revenue Scotland. More information on how to claim a refund can be found on the Revenue Scotland website.

Comparing LBTT with SDLT

In England and Northern Ireland, the equivalent tax is the Stamp Duty Land Tax (SDLT). While both taxes are similar in structure, there are key differences in the rates and thresholds. For instance, the SDLT threshold for residential properties is £250,000, higher than Scotland’s £145,000 threshold. Additionally, the rates for higher-value properties differ, with LBTT generally being more progressive.

Exemptions and Reliefs

There are several exemptions and reliefs available under LBTT. For instance, certain transactions such as transfers between spouses or civil partners are exempt. First-time buyers can also benefit from relief on properties up to £175,000, reducing the amount of tax payable.

More detailed information on exemptions and reliefs can be found on the Revenue Scotland website.

Conclusion

Understanding LBTT is essential for anyone involved in property transactions in Scotland. Whether you are buying your first home, investing in a buy-to-let property, or purchasing commercial premises, knowing how LBTT works can help you plan your finances effectively. For further guidance, consult with a solicitor or visit the Revenue Scotland website for the latest information.

Useful article? You may find it helpful to read the original guidance here: Welsh Revenue Authority LTT: Claim Refund for Higher Rate Land Transaction Tax After Selling Previous Home

View all WRA LTT Guidance Pages Here