Land and Buildings Transaction Tax (Scotland) Act 2013 Schedule 2 paragraph 15

Inheritance tax payments not treated as chargeable consideration

Paragraph 15 of Schedule 2 provides that where a land transaction arises from an inheritance — whether through a lifetime transfer of value or on death — any inheritance tax paid by the buyer does not count as chargeable consideration for LBTT purposes.

• This rule applies to land transactions that are either transfers of value for inheritance tax purposes (as defined in the Inheritance Tax Act 1984) or dispositions of chargeable interests from a deceased person's estate, whether by will or under intestacy rules.
• Where the buyer is liable to pay, agrees to pay, or actually pays any inheritance tax arising on the transfer or disposition, that inheritance tax payment is disregarded when calculating the chargeable consideration for the transaction.
• The practical effect is that LBTT is not charged on any inheritance tax borne by the buyer in connection with acquiring the property, preventing a double tax charge on the same event.
• This applies regardless of how the buyer's obligation to pay the inheritance tax arises — whether through legal liability, voluntary agreement, or simply making the payment in practice.