Land and Buildings Transaction Tax (Scotland): Rates, ADS, and Offshore Buyer Implications

LBTT: Scotland's Property Transaction Tax

Land and Buildings Transaction Tax (LBTT) is the Scottish equivalent of Stamp Duty Land Tax (SDLT) for property transactions in Scotland. It was introduced by the Land and Buildings Transaction Tax (Scotland) Act 2013 and replaced SDLT for Scottish transactions from 1 April 2015. LBTT is administered by Revenue Scotland, not HMRC.

While the two taxes share many structural similarities — they are both charged on the consideration paid on land transactions — there are meaningful differences in rates, thresholds, and reliefs that affect the economics of Scottish property investment for UK, EU, and offshore buyers.

Residential LBTT Rates

LBTT on residential property purchases is charged at the following rates for 2025/26:

Purchase Price Band	LBTT Rate
Up to £145,000	0%
£145,001 – £250,000	2%
£250,001 – £325,000	5%
£325,001 – £750,000	10%
Above £750,000	12%

LBTT is calculated on a marginal basis — each rate applies only to the proportion of the purchase price within that band.

Example: Purchase price of £600,000:

• £145,000 × 0% = £0
• £105,000 × 2% = £2,100
• £75,000 × 5% = £3,750
• £275,000 × 10% = £27,500
• Total LBTT: £33,350

The nil-rate threshold (£145,000) is lower than the SDLT nil-rate threshold in England and Wales (£250,000, or £425,000 for first-time buyers). Scottish property buyers at lower price points therefore pay more transaction tax than English buyers at equivalent prices.

The Additional Dwelling Supplement (ADS)

The Additional Dwelling Supplement (ADS) is a surcharge on LBTT that applies to the purchase of an "additional dwelling" — a residential property that is not the buyer's main residence. It was increased from 4% to 6% from 1 April 2024 (applying to transactions with an effective date on or after 1 April 2024).

The ADS at 6% is applied on the total purchase price, not on a marginal basis — 6% on the entire consideration if any ADS is payable.

Revised example with ADS: Purchase price of £600,000 as a second home:

• LBTT: £33,350
• ADS (6% × £600,000): £36,000
• Total: £69,350

The ADS applies to:

• Second homes
• Buy-to-let properties
• Properties purchased by companies (see below)
• Properties purchased by trusts in most circumstances

ADS refund window: A buyer who sells their main residence within 18 months of buying the new property (where the ADS was paid because the main residence had not yet been sold) can apply for a refund of the ADS from Revenue Scotland. The refund window was extended from 18 months in earlier rules.

Commercial LBTT Rates

Non-residential property (commercial) transactions in Scotland:

Purchase Price Band	LBTT Rate
Up to £150,000	0%
£150,001 – £250,000	1%
Above £250,000	5%

Commercial leases attract LBTT on the net present value (NPV) of rent over the lease term, at 1% on the NPV above £150,000.

The 15% Flat Rate for Companies

A company (or other non-natural person — this includes partnerships with corporate members and trusts managed by corporate trustees) purchasing residential property in Scotland with a purchase price above £500,000 is subject to LBTT at a flat 15% rate.

This flat rate is the Scottish equivalent of the 15% SDLT rate that applies in England and Wales (introduced in 2012). It was brought into LBTT from 2018. The rate applies to the full purchase price, not on a marginal basis.

Example: A company purchasing a £1.5 million residential property in Edinburgh:

• Flat rate: 15% × £1,500,000 = £225,000
• Compare with individual buyer (including 6% ADS): LBTT of £138,350 + ADS of £90,000 = £228,350

At £1.5 million, the corporate and individual rates are approximately similar. At lower values (e.g., £600,000), the individual + ADS cost (£69,350) is far below the corporate flat rate (£90,000).

Reliefs: Commercial Property, Group Transactions, and Others

Group Relief

Group relief is available for LBTT on intra-group transfers of Scottish property. For a transfer to qualify:

• Both companies must be members of the same corporate group (75% commonly controlled)
• The transaction must not be part of a scheme to avoid LBTT

Group relief can defer LBTT on intragroup property transfers indefinitely — but it is clawed back if the two companies leave the same group within three years of the transaction.

Charities Relief

Transactions where the buyer is a charity and the property is being acquired for charitable purposes are exempt from LBTT (including the ADS). This mirrors the UK SDLT charities relief.

Mixed Transactions: Overlap with SDLT

Where a transaction involves both Scottish and English property (a single sale of a portfolio including properties in Glasgow and Manchester), the apportionment of consideration between the Scottish and English elements determines how much is LBTT and how much is SDLT. The apportionment must be made on a just and reasonable basis.

For offshore buyers of mixed UK property portfolios, the administrative complexity of dual-filing (SA-SDLT for England/Wales, LBTT for Scotland) is significant. Revenue Scotland and HMRC require separate returns, separate payment, and separate compliance — there is no consolidated return mechanism.

Implications for Offshore Buyers of Scottish Property

Offshore buyers face the same LBTT rates as UK buyers — there is no additional surcharge specifically for non-resident buyers in Scotland (unlike the 2% SDLT surcharge for non-UK resident buyers in England, which was introduced by the Finance Act 2021).

However, offshore buyers holding Scottish property through a company will be subject to:

1. The 15% flat LBTT rate on purchase (if residential and above £500,000)
2. The ATED charge (if the property value exceeds £500,000 and no relief applies)
3. UK NRCGT on any gain on disposal of the property (since April 2015 for residential property and April 2019 for commercial)
4. Potential UK IHT exposure if the owner is UK-connected or the company is UK-sited

The combined LBTT, ATED, and NRCGT cost of offshore company ownership of Scottish residential property — particularly without a qualifying ATED relief — is generally prohibitive compared to direct individual ownership.

HPT Group advises Scottish property investors, offshore buyers, and UK property companies on LBTT planning, ADS refund claims, and the overall tax structure for Scottish property acquisition. For a transaction-specific LBTT analysis or an offshore property structure review, contact our UK property tax team or apply for a consultation.