Welsh Revenue Authority LTT: Land Transaction Tax Relief Guidance for Multiple Dwelling Acquisitions in Wales

This page provides guidance on Land Transaction Tax (LTT) relief for acquisitions involving multiple dwellings, as outlined in schedule 13.

• Explains the principles of LTT relief for multiple dwellings.
• Details the conditions under which relief can be claimed.
• Offers technical guidance for calculating the relief amount.
• Includes examples to illustrate the application of the relief.
• Provides links to further resources and related legislation.

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 aims to provide a comprehensive understanding of LBTT, including its rates, reliefs, and how it affects property transactions.

What is LBTT?

LBTT is a tax levied on the purchase of land and buildings in Scotland. It is part of the devolved tax system, meaning it is managed by the Scottish Government rather than the UK Government. The tax applies to both residential and non-residential property transactions, with different rates and bands for each.

How is LBTT Calculated?

LBTT is calculated based on the purchase price of the property. It uses a progressive tax system, meaning the rate of tax increases with the value of the property. The tax is calculated in bands, similar to income tax, where different portions of the property price are taxed at different rates.

Residential Property 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 property 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

Non-Residential Property Rates

Non-residential properties, such as commercial buildings, have different LBTT rates:

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

Additional Dwelling Supplement (ADS)

If you are purchasing an additional residential property, such as a second home or buy-to-let property, you may be liable to pay the Additional Dwelling Supplement (ADS). This is an extra 4% on top of the standard LBTT rates. ADS is applicable if you own more than one property at the end of the day of the transaction.

Reliefs and Exemptions

There are several reliefs and exemptions available under LBTT, which can reduce the amount of tax payable. Some of the key reliefs include:

First-Time Buyer Relief

First-time buyers purchasing a residential property can benefit from a relief that increases the nil rate band from £145,000 to £175,000. This means that first-time buyers do not pay LBTT on the first £175,000 of their property price.

Multiple Dwellings Relief

This relief applies when purchasing multiple dwellings in a single transaction. It allows the buyer to calculate LBTT based on the average price of the dwellings rather than the total price. This can result in significant savings.

For more details on Multiple Dwellings Relief, visit the Revenue Scotland website.

Charities Relief

Charities may be eligible for relief from LBTT if the property is used for charitable purposes. This relief can be partial or full, depending on the circumstances.

Filing and Paying LBTT

When you purchase a property, you must submit an LBTT return to Revenue Scotland, even if no tax is due. The return must be submitted, and any tax due paid, within 30 days of the effective date of the transaction, usually the date of completion.

Most people use a solicitor or conveyancer to handle the LBTT return and payment process. They will ensure that all necessary paperwork is completed and submitted on time.

Penalties for Late Payment

Failing to submit an LBTT return or pay the tax due on time can result in penalties and interest charges. It is important to ensure that all obligations are met promptly to avoid additional costs.

Conclusion

Understanding LBTT is essential for anyone involved in buying property in Scotland. The tax system is designed to be progressive, ensuring that those purchasing higher-value properties contribute more. With various reliefs and exemptions available, it is possible to reduce the tax burden in certain situations. Always seek professional advice to ensure compliance and to take advantage of any available reliefs.

For further information on LBTT, including detailed guidance and resources, visit the Revenue Scotland website.

Useful article? You may find it helpful to read the original guidance here: Welsh Revenue Authority LTT: Land Transaction Tax Relief Guidance for Multiple Dwelling Acquisitions in Wales

View all WRA LTT Guidance Pages Here