Land and Buildings Transaction Tax Update
The Finance Minister, Kate Forbes MSP, announced on 4 March 2021 that the temporary increase in the Land and Buildings Transaction Tax (LBTT) threshold that has been in place since 15 July 2020, will return to the previous levels from 1 April 2021. Unlike in England, the Scottish Government have decided not to extend the relief to purchasers as a result of the COVID-19 pandemic.
LBTT Bandings from 1 April 2021
Following this change, anyone in the process of buying a property in Scotland that has or will have a Date of Entry on or after 1 April 2021 will be liable to pay LBTT on properties with a purchase price of £145,000 or more
| Purchase Price | LBTT Banding up to 31 March 2021 | LBTT Banding from 1 April 2021 |
|---|---|---|
| Up to £145,000 | 0% | 0% |
| £145,001- £250,000 | 0% | 2% |
| £250,001 – £325,000 | 5% | 5% |
| £325,001 – £750,000 | 10% | 10% |
| Over £750,000 | 12% | 12% |
Realistically, if you have just had an offer accepted or you anticipate that you will soon be submitting an offer for a property, then you will more than likely have a Date of Entry post 1 April 2021.
In practice, this means that anyone purchasing a property with a Date of Entry of 1 April 2021 or later will have to pay up to £2,100 more on LBTT than they would have during the period that the temporarily increased threshold was in place
The Return of First-time Buyer Relief
While most purchasers won’t welcome the increased amount of LBTT due, it isn’t all bad news. One of the effects that the temporary threshold has had is that First-time Buyers lost their First-time Buyer Relief, which increased the threshold that LBTT would become payable from £145,000 to £175,000 and, in-turn, saving them up to £600.
With the reduction of the threshold to its previous levels, First-time Buyers will be able to benefit from this again and, whilst not as generous as the temporary threshold, it means that the cost of purchasing property is lower for purchasers just getting onto the property ladder.
Buoyancy in the Property Market
The property market has been very healthy since it was able to re-open last summer and there are still a high number of properties coming to the market, which helps potential purchasers by providing a broader range of options to suit their needs.
Not only is property supply good, but mortgage lenders are slowly re-introducing 90% Loan to Value (LTV) mortgages with some, albeit often only temporarily, providing 95% LTV mortgages for First-time Buyers. Adding to the drive to re-introduce 95% LTV mortgages is the UK Government announcement that they will guarantee First-time Buyer mortgages, with the scheme due to be introduced this April.
The details of how lenders will respond to the UK Government’s scheme is yet to be seen, but the overall picture is pointing towards purchasers finding it easier to secure the mortgage finance they need to purchase property.
Our experienced Conveyancing Team are experts in providing a variety of residential property services, including the purchase and sale of property, transfers of property, discharge of lender’s and shared equity holder’s securities.
If you need assistance with any of these services, please contact us here or by calling us on 0141 375 1222.
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Please note: This article is for general information purposes only and does not constitute legal advice. It should not be relied upon as a substitute for professional legal advice tailored to your specific circumstances. If you need advice on a legal matter, get in touch with our team.
