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UK: Land and buildings transaction tax - new rates announced

23 January 2015   (0 Comments)
Posted by: Author: Ainsley MacLaren
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Author: Ainsley MacLaren (MacRoberts)

John Swinney today announced the revised rates of land and building transaction tax which will apply to acquisitions of residential property from 1 April 2015. 

These new rates could have far reaching effects for all.

The rates announced are as follows:

Up to £145,000 – Nil

From £145,001 to £250,000 – 2%

From £250,001 to £325,000 – 5%

From £325,001 to £750,000 – 10%

Over £750,001 – 12%

LBTT is a progressive tax, so the amount of consideration which falls within each of the tax bands is subject to tax at that rate.

The effect of these rates is that, following the changes made to stamp duty land tax by the Chancellor of the Exchequer in December, anyone buying a house for more than £333,000 will pay more LBTT than SDLT.  On a £500,000 purchase LBTT will be £23,350, which is £8,350 more than it would have been under SDLT.  On a purchase of £800,000, there will be an increase in tax of £24,350 under LBTT.

Land and buildings transaction tax is the new Scottish tax which will replace stamp duty land tax in respect of acquisitions of land in Scotland from April 2015.  On 9 October 2014, John Swinney announced the rates of LBTT as part of his budget statement.  The effect of the residential rates announced at that time was that anyone paying more than £325,000 for a house would have paid more LBTT.  On 3 December 2014, George Osborne announced an immediate change in the residential rates of stamp duty land tax.  The effect of these SDLT changes meant that from April 2015, anyone buying a house in Scotland for more that £254,000 would pay more LBTT than SDLT.  On 18 December 2014 the Scottish Conservatives issued a proposal for the reduction of the rates of LBTT which apply to residential transactions.  John Swinney announced on 18 January that the rates would be reviewed and today's announcement is the outcome of that review.

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