Some interesting differentials in land transaction tax and stamp duty land tax have established themselves since 1st April 2015 when the new Scottish Land and Buildings Transaction Tax came into force.

For example, since 1st April 2015 Scottish purchasers will have to budget for £78,350.00 Land and Buildings Transaction Tax (`LBTT') if acquiring a residential property for £1,000,000 in Scotland as compared with SDLT of £43,750.00 payable for a property of equivalent value south of the border – a differential of £34,600.00. Investors acquiring freehold commercial premises of £5,000,000 will pay LBTT of £212,250 for Scottish commercial real estate as compared with SDLT rates of £200,000 (4%) for property of the same value elsewhere in the UK.

LBTT commercial tenants will pay LBTT at the same rate as for SDLT on rent but Scottish commercial leaseholders will be required to submit LBTT returns every three years, on a transfer of the lease and at lease end. There will be no cut off on assessment as there is with SDLT at the end of year 5. Residential leases in Scotland are exempt unless they are for more than 175 years.

LBTT will be payable on submission of the tax return within 30 days of the effective date.This differs from SDLT which does not have to be paid at the same time as submission of the tax return but is payable within 30 days of the effective date.

LBTT is accounted for direct to Revenue Scotland. Stamp Duty Land Tax will continue to be payable in the usual way to HM Revenue & Customs. Investors are advise to check these issues carefully , seek appropriate advice and factor into their budget when acquiring property portfolios in both jurisdictions.

RESIDENTIAL RATES

ACCUMULATIVE SLAB RATES IN BOTH JURISDICTIONS

STAMP DUTY LAND TAX

Less than £125,000 0%

£125,001 to £250K 2%

£250,001 to £925K5%

£925,001 to £1,500,00010%

Over £1,500,00012%

SCOTTISH LBTT

Less than 145k 0%

over 145K to £250k 2%

over 250k to £325k 5%

over £325k to £750k10%

Over £750k 12%

COMMERCIAL RATES

STAMP DUTY LAND TAX – AT THRESHOLD ONLY

Less than £150K 0%

Over £150k to £250k 1%

Over £250K - £500K 3%

Over £500k - 4%

SCOTTISH LBTT – ACCUMULATIVE SLAB RATES

Less than £150k 0%

Over £150k - £350K 3%

Over £350k - 4.5%