End to temporary LBTT relief

Last summer the Scottish Government made a temporary change to Land & Buildings Transactions Tax (LBTT), raising the threshold at which it becomes payable from £145,000 to £250,000. This was to support the housing market during the Covid-19 pandemic and was intended to apply until 31 March 2021. The Scottish budget report for the tax year 2021-2022 has recently been published and confirms that the temporary change will cease to apply from 1 April 2021 onwards. The ceiling of the nil rate band for residential LBTT will therefore return to £145,000.

The Additional Dwelling Supplement (ADS), which applies to purchases of additional residential properties (other than one which is intended to be the buyer’s main residence and is replacing their former main residence) will remain at 4%. The Scottish Government has, however, stated that it intends to consult early in the next parliament on reforms to the ADS. This is in response to a number of long-standing calls for change regarding aspects of the ADS, in particular to extend the length of time within which a previous main residence must be sold for a repayment to be claimed, and to address various scenarios involving joint buyers.

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