If you are buying a home or property costing above £145,000 in the Scotland, you have to pay LBTT (Land & Buildings Transaction Tax) on it. In addition to that, if you are buying an extra property (above £40,000), you have to pay 4% more on the property’s total purchase cost. The standard rates of LBTT may also apply with it. So, in this blog, you will know what is LBTT, how much it is, and further details.
First, we will explore what is LBTT? So, let’s start!
Talk to our professionals about all the problems regarding your business! We are friendly, cost-effective chartered accountants that provide accountancy, taxation, and payroll services at affordable prices! Contact us now!
What is LBTT (Land & Buildings Transaction Tax)?
It is a tax that you have to pay in case you are buying a piece of land or property in Scotland. However, you will not have to pay LBTT on the properties that cost below £145,000. This will apply only if you possess a property before and if you are a first-time buyer.
The properties that cost more than the given limit will pay LBTT depending on the property’s value. On buying a second house or buy to let properties (above £40,000), you will have to pay an extra dwelling supplement of 4%.
What are the Current Rates for Residential LBTT?
For LBTT, there are different rate bands. The following infographics will show you the current rates for residential LBTT that are confirmed in the Scottish Budget (2021-2022).
Are you tired of taxation problems? Let us handle it!
What is the LBTT for First-Time Buyers?
In case you purchase a property you plan to live in as your primary residence, you can claim a first-time buyer relief. At the time you submit your LBTT return, you can claim the relief. If you are a first-time buyer, you must fulfill the criteria to be eligible for the tax relief.
You will be allowed for zero LBTT for the properties that costs up to £175,000 if you qualify for the tax relief. So if you first-time buy a property that costs above £175,000, you will have to pay tax on the part of the cost above £175,000.
Whatever your property’s price, you will get tax relief on the first £175,000 of the cost. See the following examples.
You must submit an LBTT return; otherwise, the Scotland revenue may charge you interest and penalties.
How can I Pay LBTT?
You can deal with the LBTT return by yourself, but generally, your solicitor will deal with it. Then, all you need to do is to ensure that the tax is submitted on time. If your new house price is below £250,000, you are still required to submit a return even if you won’t have to pay any LBTT.
Quick Sum Up
We hope the highlighted details have helped you to understand what is LBTT and the amount of tax you need to pay to Scotland revenue as per your property cost. There is no way to escape from paying taxes; you must have to pay tax.
Therefore, for this, you will have to see even if you qualify for relief or not? And then calculate your tax according to it, which is complicated and time-consuming. Therefore, we will recommend you seek help from a professional regarding this.
Reduce your business burden by letting us calculate your LBTT. We are professional, cost-effective, and friendly! We will provide the best solution to all your problems regarding LBTT! So, contact us now!
Disclaimer: This blog contains general information about what is LBTT.