From 1 April 2015, Stamp Duty Land Tax (SDLT) will cease to exist. Instead, transactions involving land and property in Scotland will be chargeable for a new tax called the Land and Buildings Transaction Tax (LBTT).
LBTT is the first Scottish tax rate in more than 300 years to be announced. It is going to alter the tax regime for both residential and non-residential properties.
This article focuses on the non-residential position, however, if you would like clarification on the implications for residential property, our Residential Team has also provided an update if you are considering purchasing a house or flat.
SDLT, which currently applies, was what is known as a “slab tax” so the whole price was charged at one rate and the rate was determined by the total consideration paid. LBTT is different in that it is a progressive tax, like Income Tax, so the proportion of the consideration in each tax band will have a different rate of LBTT applied to it. Details of the new LBTT rates are set out here:-
| Non-residential property LBTT rates: | |
| Up to £150,000 | Nil |
| £150,000 – £350,000 | 3% |
| Over £350,000 | 4.5% |
These rates apply in property purchases. The rate of LBTT which applies to non-residential leases remains the same as the SDLT rate which applies to leases.
The calculations in respect of non-residential properties whereby the acquisition value is less than £2million will pay less LBTT than SDLT previously payable.
Many transactions are entitled to certain reliefs from SDLT at present and we are still awaiting confirmation as to how these transactions will be treated, for example, will sub-sale relief or multiple dwelling relief be available? A further update will be issued as soon as more information is available.
In addition to the new LBTT rates, a Scottish Landfill Tax Rate will apply to disposals to landfill sites in Scotland. This was set at a higher rate of £82.60 per tonne and a lower rate of £2.60 per tonne.
