Land and Buildings Transaction Tax (LBTT) is the Scottish tax paid by the buyer when residential or commercial property in Scotland is acquired, and it replaced Stamp Duty Land Tax in Scotland from 1 April 2015. Like SDLT it is charged in slices, but the bands are different: residential purchases pay nothing up to £145,000 and 12% on the part above £750,000, and the return is due within 30 days rather than 14.

Where does LBTT apply and who runs it?

LBTT applies to residential and commercial transactions in Scotland, including commercial leases, where a chargeable interest is acquired. It is administered by Revenue Scotland, not HMRC, and tax policy is set by the Scottish Government. The governing statute is the Land and Buildings Transaction Tax (Scotland) Act 2013, with the administrative rules on returns, enquiries and penalties in the Revenue Scotland and Tax Powers Act 2014.

The buyer is the taxpayer. A property in England or Northern Ireland stays within SDLT, and one in Wales falls under Land Transaction Tax. The location of the property decides the tax, not where the buyer lives or where the solicitor practises.

What are the residential rates in 2026 to 2027?

The residential bands Revenue Scotland publishes have applied since 1 April 2021 and still apply for the 2026 to 2027 tax year. Each rate applies only to the slice of the price within its band.

Slice of the price LBTT rate
Up to £145,000 0%
£145,001 to £250,000 2%
£250,001 to £325,000 5%
£325,001 to £750,000 10%
Over £750,000 12%

Revenue Scotland’s own examples show the effect: a £235,000 purchase costs £1,800 (2% on the £90,000 above £145,000), while an £875,000 purchase costs £63,350.

First time buyers

First time buyer relief raises the residential nil rate band to £175,000. Because only the 2% band is affected, the most it can save is £600.

How is non residential and mixed property taxed?

Shops, offices, forests, agricultural ground forming part of a working farm, and mixed use property are non residential. So is a purchase of six or more dwellings in one transaction, along with hotels, hospitals, care homes, prisons and halls of residence for students in further or higher education. The non residential bands, in force since 25 January 2019, are:

Slice of the price LBTT rate
Up to £150,000 0%
£150,001 to £250,000 1%
Above £250,000 5%

On a £465,000 commercial purchase that gives £1,000 plus £10,750, a total of £11,750. Commercial leases have their own rent bands and a three yearly review cycle, covered in LBTT on non residential leases.

How does LBTT differ from SDLT?

The structure is the same idea, a slice system charged on the chargeable consideration, but almost every number and several procedures differ.

Feature LBTT (Scotland) SDLT (England and Northern Ireland)
Residential nil band £145,000 £125,000
Top residential rate 12% above £750,000 12% above £1.5 million
First time buyers Nil band raised to £175,000 Nothing up to £300,000, 5% to £500,000, no relief above £500,000
Additional homes Additional Dwelling Supplement of 8% of the whole price 5% added to each band
Non UK resident buyers No surcharge in the published LBTT rate tables 2% surcharge
Non residential middle band 1% from £150,001 to £250,000 2% from £150,001 to £250,000
Return and payment Within 30 days Within 14 days of completion
Commercial leases Further returns every three years No equivalent three yearly review

The result is that LBTT is cheaper than SDLT at the bottom of the market and much more expensive at the top. On £235,000, LBTT is £1,800 while SDLT would be £2,200 (2% on £110,000). On £875,000, LBTT is £63,350 while SDLT would be £33,750 (£2,500 plus 5% on £625,000). The SDLT side is explained in Stamp Duty Land Tax explained.

How does the Additional Dwelling Supplement fit in?

A buyer who will own two or more dwellings at the end of the effective date, and is not replacing a main residence, pays the Additional Dwelling Supplement on top of LBTT. For contracts entered into and completed from 5 December 2024 the rate is 8% of the whole purchase price, not just the slice above a threshold. Companies pay it on almost every residential purchase of £40,000 or more. The conditions, and the 36 month repayment window for people caught between two homes, are covered in the LBTT Additional Dwelling Supplement.

Illustration only. Someone who already owns their home buys a £200,000 flat to let. LBTT is 2% of £55,000, which is £1,100, and the supplement is 8% of £200,000, which is £16,000, so £17,100 is due with the return.

When is a return needed and what if it is late?

A return is needed for most residential purchases where the chargeable consideration is £40,000 or more, even if no tax is payable. Purchases below £40,000 are generally not notifiable. The return must be made within 30 days of the effective date, and the tax is paid at the same time. Solicitors file through Revenue Scotland’s online system, SETS.

Late filing penalties start at £100 when the return is missed, then £10 a day for up to 90 days once it is more than three months late, then the greater of £300 or 5% of unpaid tax at six months and again at twelve months. Late payment attracts 5% of the outstanding tax if unpaid 30 days after the due date, with further 5% penalties at five and eleven months after that first penalty date. Interest also runs on unpaid tax.

Which dates decide the rates that apply?

Scottish rate changes normally carry transitional rules based on when missives were concluded. When the non residential rates changed on 25 January 2019, a purchase completing after that date still used the old rates if the contract had been entered into before 12 December 2018, and the agent had to overwrite the calculated figure on the return. The same pattern applied when the supplement rose to 8%: the old 6% rate continues where the contract was entered into on or before 4 December 2024. Always check both the contract date and the effective date before trusting a calculator.

What mistakes come up most often?

  • Using an SDLT calculator, or English rules of thumb, for a Scottish purchase. The bands, the surcharge and the filing deadline are all different.
  • Assuming no return is needed because no tax is due. A £160,000 first time purchase pays nothing but is still notifiable.
  • Forgetting that a property owned anywhere in the world can trigger the supplement, including one held by a spouse or cohabitant.
  • Treating a portfolio of six or more flats as residential. Bought in one transaction, they are taxed at non residential rates.
  • Ignoring the review returns on a commercial lease after the first return has been filed.

Buyers relocating to Scotland will usually also want to check how Scottish income tax applies to them, which is a separate question from LBTT.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.