The Team

Land & Buildings Transaction Tax – losers and…. losers?
Land & Buildings Transaction Tax – losers and…. losers?

When the Scottish Finance Secretary delivered his draft Budget proposals for the tax year 2019/20 (commencing 1st April 2019) he announced a reduction in the Land & Buildings Transaction Tax rates from 3.5% to 1% for commercial properties. However, closer inspection shows the limited nature of this reduction.


At the present time, LBTT on commercial properties (and this includes commercial leased properties), comes in at 3.5% on non-residential properties priced between £150,000 and £350,000 and at 4.5% for properties priced above that. Any non-residential properties purchased at a price below £150,000 do not attract LBTT.


Whilst the draft Budget announced a reduction in the rate for non-residential properties from 3.5% to 1%, this is now restricted to properties where the price is between £150,00 and £250,000 (down from £350,000 that applies at the moment) and a rate of 5% for any purchase price above £250,000. Whilst this may seem to be tinkering with the numbers, it is a significant change as it will bring more commercial properties into the 5% band than before.


The Finance Secretary also announced that the Additional Dwelling Supplement will increase from 3% to 4%.  Is this another nail in the coffin in the buy to let sector? Those in the buy to let sector can be excused for thinking they are the whipping boys of the UK taxation regime as there have been very significant changes in the tax treatment of those involved in this area of business in recent years.


Derek Mackay indicated that he hopes to have these changes in place by 25th January 2019 and is seeking support from other parties to implement the change. However, if implemented, the change will not apply to settlements on or after 25th January 2019 if the contract to purchase or lease was concluded before 12th December 2018 (the date of the Scottish Budget).


If you would like to read about these changes or would like access to the full draft Scottish Budget announced by the Finance Secretary on 12th December 2018, please click here.