First time buyer relief in Scotland raises the Land and Buildings Transaction Tax nil rate band from £145,000 to £175,000, so a qualifying buyer saves up to £600. Every buyer must never have owned a home anywhere in the world and must intend to live in the property as their only or main residence. Unlike the English relief there is no maximum price, but the relief cannot be claimed on a transaction that attracts the Additional Dwelling Supplement.
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Where does the relief come from?
The relief is in Schedule 4A to the Land and Buildings Transaction Tax (Scotland) Act 2013, inserted with effect from 30 June 2018 by a Scottish statutory instrument, SSI 2018/221. Revenue Scotland’s guidance is at LBTT3048. Paragraph 3 of the schedule sets out the whole of the relief: tax is not charged on the first £175,000 of the consideration for the transaction.
For the general structure of the tax, including how it differs from Stamp Duty Land Tax, see LBTT explained.
How much does it save?
The residential rates and bands, which Revenue Scotland shows as applying from 1 April 2021, are:
| Slice of price | 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% |
Because the relief takes the slice from £145,000 to £175,000 out of the 2% band, the saving is 2% of £30,000, which is £600. Revenue Scotland’s worked examples show how this works at different prices:
- A home bought for £175,000: tax before relief is £600, the relief is £600 and nothing is payable.
- A home bought for £150,000: tax before relief is £100, the relief is £100 and nothing is payable.
- A home bought for £250,000: tax before relief is £2,100, the relief is £600 and £1,500 is payable.
Illustration only. A first time buyer pays £400,000. Tax before relief is £2,100 on the 2% slice, £3,750 on the 5% slice and £7,500 on the 10% slice, a total of £13,350. Relief of £600 reduces this to £12,750. The relief is worth the same £600 at any price above £175,000, and Schedule 4A sets no maximum price.
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Who counts as a first time buyer?
Paragraph 2 defines a first time buyer as someone who has never been a buyer of a major interest in residential property that included a dwelling, and has never acquired an equivalent interest in a dwelling outside Scotland. Revenue Scotland’s guidance draws out several consequences:
- Anywhere in the world. A home owned in England, Belgium or anywhere else counts, judged by the law of the country where it is situated.
- Gifts and inheritances count. A buyer who was given or inherited a home, even one later sold, is not a first time buyer.
- Some leases count. A tenant’s interest under certain leases in the rest of the UK is treated as ownership. In contrast, paragraph 7 excludes a tenant’s interest under a private residential tenancy regulated by the Rent (Scotland) Act 1984, the Housing (Scotland) Act 1988 or the Private Housing (Tenancies) (Scotland) Act 2016.
- Trust beneficiaries. Under paragraph 5, a beneficiary of a bare trust that holds a dwelling, or of a settlement where the beneficiary is entitled to occupy the dwelling for life or to income from it, is treated as having owned it. A discretionary beneficiary with no such right is not.
- Trustees and executors. Under paragraph 6, holding a home only as a trustee or personal representative for someone else does not count as ownership.
What other conditions must be met?
Paragraph 1 requires all of the following:
- The transaction is the acquisition of a major interest, meaning ownership or a tenant’s interest under a lease.
- The property consists entirely of residential property and includes a dwelling, so a mixed use purchase such as a flat with a shop does not qualify.
- Each buyer intends to occupy the dwelling as their only or main residence. Revenue Scotland accepts that a buyer may move in later, for example after structural repairs, if the intention is clear. Relief cannot be claimed where the evidence shows another home will stay the main residence or the property was bought for another purpose, such as with a buy to let mortgage.
- The transaction is not one of a number of linked transactions, except where the linked purchase is garden or grounds of the dwelling, or ground or rights that exist for its benefit.
- The transaction is not one to which the Additional Dwelling Supplement applies.
Paragraph 4 deals with alternative finance arrangements: the individual, rather than the financial institution that buys the property, is treated as the buyer when testing the first time buyer conditions.
What happens when buying with a partner or spouse?
Where there is more than one buyer, every buyer must meet every condition. In Revenue Scotland’s example, two partners renting together buy a home for £195,000; one has never owned property but the other once owned a home in Belgium, so no relief is due at all.
The supplement can also block the relief for a buyer who has never owned anything. In another example, Orange has never owned a home but lives with a spouse who owns one. Orange buys a new home for the couple and the spouse keeps the old one as a holiday let. Spouses are treated as owning each other’s dwellings for the supplement, and the old main residence is not being disposed of, so the supplement applies and first time buyer relief is lost. See the LBTT Additional Dwelling Supplement.
How is the relief claimed and when can it be withdrawn?
The relief must be claimed in the first LBTT return for the transaction or in an amendment to that return. A return is needed for most residential purchases with consideration of £40,000 or more even where no tax is payable, so a buyer whose tax is wiped out by the relief still files. For a standard house purchase the filing date is 30 days beginning with the day after the effective date, and under section 83 of the Revenue Scotland and Tax Powers Act 2014 a return can be amended within 12 months of the filing date. See LBTT returns and deadlines.
Paragraph 1(3) withdraws the relief if a later transaction becomes linked to the purchase, unless that later purchase is of garden or grounds of the dwelling, or ground or rights that exist for its benefit. Revenue Scotland says a further LBTT return must then be made, and a return may also be needed for the later transaction.
How does it compare with the relief in England?
The two reliefs are built differently. In England and Northern Ireland, Stamp Duty Land Tax first time buyer relief means no tax up to £300,000 and 5% on the portion from £300,001 to £500,000, and it cannot be claimed at all if the price is over £500,000. The Scottish relief is smaller, at most £600, but is available at any price. Both require every buyer in a joint purchase to be a first time buyer. Buyers comparing the regimes should see SDLT first time buyer relief.
What mistakes come up most often?
- Overlooking a past interest. An inherited share in a house, a former home abroad or a life interest under a family trust all count as ownership.
- A joint buyer who has owned before. One previous owner on the title removes the relief for everyone.
- Buying to let. The intention to occupy as an only or main residence must be real.
- Mixed purchases. Buying a shop or other non residential property in the same deal can make the transactions linked and the property not entirely residential.
- Missing the claim. Relief not claimed on the return must be added by amendment within 12 months of the filing date.
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Related Accountapedia entries
- SDLT first time buyer relief
- LBTT (Scotland) explained
- LBTT reliefs in Scotland
- LBTT returns and deadlines
- Adopting IFRS for the first time: IFRS 1
Sources
- legislation.gov.uk: Act of the Scottish Parliament 2013 c. 11, schedule 4A
- Revenue Scotland: Lbtt3048 first time buyer relief
- Revenue Scotland: Residential property
- Revenue Scotland: How amend lbtt return
- GOV.UK: Residential property rates
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.