In her draft Budget announced on 28 January, the Cabinet Secretary for Finance, MSP Kate Forbes, informed us that Land & Buildings Transaction Tax (LBTT) thresholds would revert to their pre-Covid-19 levels.
In July last year as the country was coming out for the first lockdown, Kate Forbes announced that the threshold before which LBTT is payable would be increased to £250,000. What that meant was that house buyers would pay no LBTT unless the price was more than £250,000. Admittedly, she did advise at the time that this change would only be effective until 31 March 2021, a date which is fast approaching!
Not only did the LBTT change mean that those purchasing for up to a price of £250,000 paid no LBTT but that those who bought for more than that made a saving of £2,100. LBTT is a large part of any house purchase budget!
From 1 April, LBTT will revert to its pre-pandemic levels. What this means is that those buying a house for a price of more than £145,000 (£175,000 for first-time buyers) will have to pay this property tax. This starts at 2% of the amount of the purchase price over £145,000 (£175,000 for first-time buyers) and increased in bands as the price increased – with the next band starting at £250,000 where, in addition to the 2% charge on the price between £145,000 and £250,000 and with a 5% charge above that. There are further price bands above the 5% band and, as you would expect, the percentage simply increases.
When making the announcement, the Finance Secretary stated that first-time buyers still had a saving of £600 because of the higher threshold before which LBTT is paid.
If you would like to discuss your house purchase or wish any advice on Land & Buildings Transaction Tax, please get in touch.
