Scottish Budget Update – LBTT for Commercial Property Transactions

13 December 2018

Finance Secretary Derek Mackay has announced that the Scottish Government intends to reduce the lower rate of Land and Buildings Transaction Tax (“LBTT”) for non-residential property transactions, whilst increasing the cost for higher value property acquisitions.

These changes are proposed to come into force from 25 January 2019, but will not apply if the contract for a transaction was entered into prior to 12 December 2018.

These measures align the top rate of LBTT with the top rate of Stamp Duty Land Tax which applies south of the border, with comparably lower tax for property transactions under £250,000.

 

LBTT non-residential property: proposed rates

Purchase price

Current

24 Jan 2019

Proposed

25 Jan 2019

Up to £150,000

0%

0%

£150,001 to £250,000

3%

1%

£250,001 to £350,000

3%

5%

Above £350,000

4.5%

5%

 

To put this in context: if these proposals are introduced, the purchase of a commercial property for £250,000 will enjoy reduced LBTT of £1,000, down from £3,000, whereas a purchase at £350,000 will be neutral, and a purchase at £2m will attract additional LBTT of £8,250.

The LBTT rates for residential properties remains unchanged.

For more information, contact Derek Mitchell (derek.mitchell@aab.uk) or your usual AAB Advisor.

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