When buying a property in Scotland, two key taxes may apply: LBTT (Land and Buildings Transaction Tax) and ADS (Additional Dwelling Supplement). Understanding these costs is essential for budgeting your purchase.
What is LBTT (Land and Buildings Transaction Tax) in Scotland?
LBTT replaced UK Stamp Duty in Scotland in 2015. This is a tax paid on residential and commercial property purchases over a certain price threshold, paid on top of the purchase price and solicitors’ fees and outlays.
LBTT is a progressive tax (similar to income tax bands), so the amount due increases with the value of the purchase price.
First-time buyers get relief on LBTT for purchases up to £175,000. The maximum relief is £600 off the total tax due.
You can use the LBTT calculator on Revenue Scotland’s website to see how the tax changes according to your price and circumstances. This can be a very useful way to work out your maximum budget or offer price.
How Much Will You Pay?
There is no LBTT payable on properties up to £145,000 (or £175,000 for first-time buyers).
Tax Bands:
- £145,001 – £250,000: 2%
- £250,001 – £325,000: 5%
- £325,001 – £750,000: 10%
- Over £750,000: 12%
The calculator will help show you what this looks like in practice.
What is ADS (Additional Dwelling Supplement) in Scotland?
ADS was introduced in 2016, and it is an additional tax on top of LBTT when you purchase a second property such as a holiday home or buy-to-let property.
- As of December 2024, the ADS is a flat rate of 8% of the purchase price, so it can add a significant sum to the costs of buying.
- You will usually pay ADS if you already own residential property anywhere in the world, not just in Scotland.
- You may be able to reclaim ADS if you sell your only or main home within 36 months following your purchase (and can show evidence that you lived in it).
- If you are buying jointly, and one of you already owns another property, ADS may still apply.
- ADS is not due where you are replacing your main residence on the same day, but if you buy first and sell later, you will need to pay ADS and reclaim it afterwards.
When and How do You Pay LBTT and ADS?
Your solicitor will calculate the tax due based on your circumstances and will submit the LBTT (and/or ADS) return once your purchase is complete.
They are bound to complete the return before the property can be registered in your name, so they will require you to pay them the tax amount at the same time as your deposit, fees, and outlays.
It’s important to be aware of these costs and to ensure you have enough funds to cover them.
Why LBTT and ADS Matter When Buying Property in Scotland
Unexpected tax costs can derail your budget and limit what you think you are able to offer.
You need to be aware of the implications of the price you are offering for a property and be able to show you have the cash available to cover those additional costs.
Early legal advice helps avoid nasty surprises – especially for second homes or joint purchases.
Need Help With LBTT and ADS?
Our conveyancing solicitors in Glasgow and Edinburgh would be more than happy to assist if you are looking to buy and have any questions about LBTT or ADS.
Contact our conveyancing team today for tailored advice on your property purchase in Scotland.
