Stamp Duty Land Tax (SDLT) and Land Buying Transaction Tax (LBTT) in Scotland are more or less similar in that they are both a tax on the property you buy. From 1st April 2018, it became known as the Land Transaction Tax (LTT).
Stamp Duty Land Tax (SDLT) – England and Northern Ireland
The stamp duty threshold in England and Northern Ireland is £125,000 i.e. you only have to start paying it if the property is valued above this price. For first-time buyers, it increases to £300,000 (this is one method the government is using to help make buying a first home more affordable). If it’s between £300,000 and £500,001 then the first-time buyer pays just 5% on £200,000. Those who purchase multiple properties at once may also benefit from a discount on stamp duty.
If the property or land you’re buying is for commercial purposes then the threshold is slightly higher at £150,000.
The amount of stamp duty paid by purchasers increases on a sliding scale based on the cost of the property, such as:
Up to £125,000 – 0
Next £125,000 (amount from £125,001 to £250,000 – 2%
Next £675,000 (amount from £250,001 to £925,000) – 5%
Next £575,000 (amount from £925,001 to £1.5 million) – 10%
Remaining (amount above £1.5 million) – 12%
All buyers are eligible to pay Stamp Duty if the property is:
- Part of a shared ownership scheme;
- A shared purchase.
Stamp duty is due within 30 days of the property being under your ownership. The solicitor or conveyancer who oversaw the property purchase will normally do this on the buyer’s behalf.
Land and Buildings Transaction Tax (LBTT) – Scotland
Like stamp duty the LBTT applies to buildings for both residential and commercial use. It changed its name (and legislation) from Stamp Duty back in 2013.
It also provides tax relief for first time buyers, albeit more generously. For instance, the tax threshold in Scotland is 0% for up to £175,000. The rates for ‘regular’ property buyers are:
Up to £145,000: 0
Above £145,000 to £250,000: 2%
Above £250,000 to £325,000: 5%
Above £325,000 to £750,000: 10%
Over £750,000: 12%
Tax paid on second homes
Scotland also has an Additional Dwelling Tax (ADT) – whereas in England it’s an increase of Stamp Duty for second homes. The ADT is 3% on second homes costing more than £40,000. In the case of commercial property, it increases to 4.5% for buildings worth more than £350,000.
From 2016, in England and Northern Ireland purchasers of second homes worth more than £40,000, and buy to let landlords, have paid an additional 3% stamp duty for the first £125,000 and 5% (rather than 2%) for between £125,001 and £250,000. If the purchase cost is more than £250,001 then the stamp duty is 8%. Even those who live abroad and decide to invest in a buy to let back home, will have to pay the second homes tax.