New Property Tax from April 1st 2015

Out with the old and in with the new!  From April 1st 2015, a brand new Scottish Land and Buildings Transaction Tax (LBTT) will replace the current UK government Stamp Duty.

As with any change there will be winners and losers and uncertainty for a while whilst the property market adjusts to the changes.

So what are the changes?

Firstly the threshold before a purchaser is liable to pay LBTT is being raised from £125,000 to £135,000. Great news for first time buyers & those buying and selling at this market level.

Secondly, the new tax will be “proportional” and progressive rather than the existing “slab” rate which applies a flat percentage to the total sale price. Thus a buyer is liable to pay LBTT tax at the specified rate for the portion that falls within that particular price tax banding:

Purchase priceTax rate
£0 – £135,000 0
£135,001 - £250,000 2%
£250,001 - £1m 10%
Over £1m 12%

Illustration for a property of £275,000

Current Stamp Duty:3% =£8250.

New LBTT Tax: 0% on the first £135,000,   2% on £115,000 (£2,300) and 10% on the remaining £25,000 (£2,500)  = Total tax liability £4,800


The new system is designed to be remove “artificial price ceilings” which at present skews the market particularly for homes valued around the current stamp duty thresholds namely £125k, £250k, £500k & £1m  as buyers try to avoid the sudden jump in stamp duty should the price go a penny over the threshold.

It is also designed to help those on lower incomes and first time buyers to be able to buy or sell affordable homes.


Edinburgh, being a hub of some of the highest property value postcodes in Scotland will find that a good deal of residences including a large proportion of family homes in the mid market will be adversely affected after April 1st.  Any property above £325,000 will attract a higher LBTT tax, for example , a buyer of a £450k dwelling will be liable for £8,800 additional tax under the new regime (£22,300 instead of  £13,500). This is a significant amount of extra cash they will need to find.

It is expected that there will be a flurry of activity as buyers and movers try to complete property transactions at the mid to high end of the market.  Once the LBTT takes force there will be a period of uncertainty as the change impacts on buyers affordability and it may well be that property values adjust to reflect the additional tax that buyers have to find as the market settles into the new tax regime.

5 month window to sell - Act now!

There is a 5 month window in which to sell so our advice is to ACT NOW, there is still time!     The festive season and end of year is traditionally a time when individuals and families reflect and decisions to sell or buy are often made bring a surge of buyers actively looking at the turn of the year.   So, don’t wait, now is the time to prepare your property ready to market in the New Year!   Be ahead of the change!

Prepared by Jane Yarrington, Purchase Negotiator, McQueen Legal.

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