What does section 3 of Schedule 4A of the Land and Buildings Transaction Tax (Scotland) Act 2013 do?

Section 3 of Schedule 4A sets out how first-time buyer relief reduces the amount of Land and Buildings Transaction Tax (LBTT) payable on a qualifying transaction. It provides a tax-free band on the first £175,000 of the purchase price, meaning no LBTT is charged on that portion of the consideration.

How much LBTT does a first-time buyer pay on a property costing £175,000 or less in Scotland?

A qualifying first-time buyer purchasing a property in Scotland for £175,000 or less pays no LBTT at all. The first-time buyer relief removes any LBTT charge on the first £175,000 of the purchase price, resulting in a nil tax liability for transactions at or below that threshold.

How is LBTT calculated for a first-time buyer when the purchase price exceeds £175,000?

When a first-time buyer's purchase price exceeds £175,000, no LBTT is charged on the first £175,000. LBTT is then calculated only on the amount above that threshold using the standard residential rates applicable to each band. This results in a significantly lower tax bill compared to purchasing without the relief.

What legislation introduced first-time buyer relief for LBTT in Scotland?

First-time buyer relief for LBTT was introduced by The Land and Buildings Transaction Tax (First-Time Buyer Relief) (Scotland) Order 2018. It applies to qualifying transactions and is designed to reduce the upfront tax cost for individuals buying their first home in Scotland under the LBTT regime.

Land and Buildings Transaction Tax (Scotland) Act 2013 section 3

Relief from the tax

Section 3 of Schedule 4A sets out how first-time buyer relief reduces the amount of Land and Buildings Transaction Tax (LBTT) payable on a qualifying transaction.

First-time buyer relief provides a tax-free band on the first £175,000 of the purchase price.
No LBTT is charged on the portion of the consideration up to and including £175,000.
Any amount of the purchase price above £175,000 is taxed at the normal LBTT rates.
The relief applies to any chargeable transaction that meets the qualifying conditions for first-time buyers.

Access full legislation.And much more.

By becoming a member, your team gets full access to Tax World research tools and source-backed tax resources.

Become a member