Welsh Revenue Authority LTT: Claim a Refund for Overpaid Land Transaction Tax in Wales

This webpage provides guidance on claiming a refund for overpaid Land Transaction Tax (LTT) in Wales.

• It is intended for individuals who have submitted a correct LTT return but have overpaid.
• The page includes a form to facilitate the refund process.
• Key principles involve ensuring accurate tax submissions and rectifying overpayments.
• Concepts covered include tax compliance and financial rectification.
• Available in both English and Welsh, ensuring accessibility for all users.

Understanding Land and Buildings Transaction Tax (LBTT) in Scotland

The 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 from 1 April 2015. This article will guide you through the basics of LBTT, how it works, and what you need to know if you’re buying property in Scotland.

What is LBTT?

LBTT is a tax that buyers pay when purchasing property or land in Scotland. It applies to both residential and non-residential transactions, as well as leases. The tax is progressive, meaning the rate increases with the value of the property or land.

How is LBTT Calculated?

LBTT is calculated based on the purchase price of the property or land. The tax is structured into bands, with different rates applied to different portions of the price. Here’s a breakdown of the current rates for residential properties:

• 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 house for £300,000, the LBTT would be calculated as follows:

• 0% on the first £145,000 = £0
• 2% on the next £105,000 (£145,001 to £250,000) = £2,100
• 5% on the remaining £50,000 (£250,001 to £300,000) = £2,500

Total LBTT = £0 + £2,100 + £2,500 = £4,600

Additional Dwelling Supplement (ADS)

If you’re purchasing an additional residential property, such as a second home or buy-to-let, you may need to pay an Additional Dwelling Supplement (ADS). This is an extra 4% on the total purchase price, on top of the standard LBTT rates.

For more information on ADS, visit the Revenue Scotland website.

Non-Residential LBTT Rates

LBTT also applies to non-residential properties, such as commercial buildings and land. The rates for non-residential properties are structured differently:

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

For leases, the LBTT is calculated on the net present value of the rent payable over the lease term, with rates as follows:

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

Claiming a Refund

If you believe you have overpaid LBTT, you can claim a refund. This might occur if there was an error in the calculation or if circumstances change, such as selling a previous main residence within 18 months of purchasing a new one and paying ADS.

To claim a refund, you need to submit a form to Revenue Scotland. Detailed guidance on how to claim a refund can be found on the Revenue Scotland website.

Exemptions and Reliefs

There are certain exemptions and reliefs available under LBTT. For instance, transactions involving charities or certain types of transfers between companies may be exempt. Additionally, first-time buyers may be eligible for relief, reducing the amount of LBTT payable.

For a comprehensive list of exemptions and reliefs, visit the Revenue Scotland website.

Filing an LBTT Return

After purchasing a property, you must file an LBTT return with Revenue Scotland. This should be done within 30 days of the effective date of the transaction, usually the date of completion. Even if no LBTT is due, a return must still be filed.

Failure to submit a return on time may result in penalties. Guidance on how to file an LBTT return can be found on the Revenue Scotland website.

Conclusion

Understanding LBTT is essential for anyone involved in property transactions in Scotland. By familiarising yourself with the rates, exemptions, and filing requirements, you can ensure compliance and potentially save money. For more detailed information, visit the Revenue Scotland website.

Useful article? You may find it helpful to read the original guidance here: Welsh Revenue Authority LTT: Claim a Refund for Overpaid Land Transaction Tax in Wales

View all WRA LTT Guidance Pages Here