In the draft Scottish Budget announced in the Scottish Parliament on Thursday, 28 January 2021, Kate Forbes, MSP, the Cabinet Secretary for Finance advised that the threshold after which Land & Building Transaction Tax (LBTT) would revert to pre-pandemic levels.
This means that any property purchase for more than £145,000 (£175,000 for first-time buyers) will have to pay LBTT.
The threshold had been raised in July last year to help support the housing market which had been brought more or less to a standstill when lockdown was imposed. The level was raised to £250,000 which meant that nobody paid any LBTT for any purchase up to that amount. It also meant that those who paid more than that enjoyed a saving of £2,100.
The return to the pre-pandemic level will take place on 1 April 2021 and any property purchase that settles after that date and which is over the threshold of £145,000 (£175,000 for first-time buyers) will have to pay LBTT.
Interestingly, it’s also been reported that during the period in which the threshold had been increased, the Scottish Government received more in LBTT receipts. Residential LBTT income increased to £157.3m in the last quarter of 2020 when compared to £119.1m in the last quarter of 2019 and, interestingly, in December, LBTT revenue was £60.2m which was the highest ever recorded monthly figure!
This might not be the last we hear about LBTT this year. The Chancellor of the Exchequer will deliver the UK Budget on 3 March 2021. Should he decide to extend the Stamp Duty holiday in England (the threshold has been increased there to £500,000 before which no Stamp Duty is paid), then the Cabinet Secretary for Finance may have to review her proposals for LBTT!