This year has brought with it a number of changes to property taxes.
In Scotland, changes have been made to the commercial rates and thresholds for Land and Buildings Transaction Tax (LBTT), along with an increase in the rate of the additional dwelling supplement.
Meanwhile, in England, the time limit for filing Stamp Duty Land Tax (SDLT) returns has been reduced to 14 days.
Land and Buildings Transaction Tax (LBTT)
Land and Buildings Transaction Tax (LBTT) was introduced in Scotland on 1 April 2015 to replace Stamp Duty Land Tax (SDLT).
The LBTT regime is similar in many ways to SDLT though there are a number of differences in the detail of its application. Originally the method of calculation of LBTT was quite different to SDLT: LBTT was set up to be calculated on a “progressive” basis – charged only on the proportion of the price within, and at the different rates set for, the relevant band or bands, meaning the amount of tax paid is more closely related to the value or price of the property.
This contrasted with the “slab” approach on which SDLT was charged, where the highest applicable rate of tax was charged on the total price. However the progressive approach also found favour with the UK Government, and it has now been adopted for SDLT.
In Wales, SDLT was replaced by the Land Transaction Tax (LTT) in April 2018. All three taxes apply to land transactions where a chargeable interest is acquired for chargeable consideration, and apply to both residential and nonresidential property, the purchase of heritable property and lease transactions. In Scotland LBTT is paid direct to Revenue Scotland; in Wales payment of LTT is made to the Welsh Revenue Authority; and HM Revenue and Customs collects SDLT.
Changes to LBTT and SDLT in 2019
The Scottish Government announced changes to the rates and thresholds for LBTT in its budget in December 2018, and those changes came into effect on 25 January 2019.
The rates and bands for non-residential transactions were changed: the first tax threshold was lowered from £350,000 to £250,000, but the rate was reduced from 3% to 1%. The upper rate was raised from 4.5% to 5%.
The standard rates for residential transactions remain unchanged. The Additional Dwelling Supplement (ADS) for purchases of additional residences in Scotland – e.g. a second home or a buy-to-let property (and payable in addition to the standard amount of LBTT for the purchase) was raised from 3% to 4%. The ADS rate for SDLT remains at 3%.
For more information about ADS, read our briefing.
On 1 March 2019, the UK Government introduced a reduced time limit for filing SDLT returns, from 30 days from the effective date of the transaction (usually completion) to 14 days. The time limit for filing LBTT returns remains at 30 days from the effective date of the transaction
To find out more about the latest changes to the Land and Buildings Transaction Tax (LBTT) in Scotland, Stamp Duty Land Tax (SDLT) in England, and Land Transaction Tax (LTT) in Wales, we invite you to download our full briefing here.