22 Aug 2018

Ask the expert: How much will LBTT cost?

Ask the expert: How much will LBTT cost?

Before you’ve started looking for a home, you may not have even come across the term LBTT or Land and Buildings Transaction Tax.

You’re probably more likely to have heard of Stamp Duty which is essentially a tax the house buyers are required to pay. In a nutshell, LBTT has replaced Stamp Duty and is designed to be more proportionate to the value of the property you are buying.

What are the LBTT Rates?

LBTT is applied on a banding system for properties purchased over £145,000. If you are purchasing a property for less than this you will be required to pay any LBTT.

The LBTT rate for for purchases between £145,000 and £250,000 is 2%. The next band is between £250,000 and £325,000, with the rate being 5%.

Moving up the ladder, the current rate for properties between £325,000 and £750,000 is 10% and then 12% for anything over £750,000. If the purchase price is above the nil rate tax band of £145,000, LBTT is charged at the appropriate rate on the amount of the chargeable consideration with the relevant tax bands.

An example of this would be the purchase of a property for £280,000:

  • 0% for the first £145,000
  • 2% for the next £105,000
  • 5% for the next £30,000
  • The result is a tax liability of £3,600

Help for first-time buyers

However, following some changes announced by the Scottish Government, as of 30th June 2018, there is some first-time buyer relief available on contracts entered into after 9th February and with a date of entry schedule for after 30th June. Simply, this raises the zero LBTT threshold from £145,000 to £175,000. There is also a £600 relief for first time buyers purchasing a property over £175,000.

The level of tax you could potentially be liable for could impact your finances significantly so it’s always important to seek the advice of your solicitor or independent mortgage adviser if you’re unsure in any way.

Use our LBTT Calculator

Find out how much LBTT you will need to pay by clicking here.

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