Recent changes in stamp duty rates for residential property06 March 2019
Written by James & George Collie
In October 2014 the Scottish Government announced the rates and bands for the new Scottish equivalent for Stamp Duty Land Tax (SDLT), to be known as Land and Buildings Transaction Tax (LBTT), to take effect from 1st April 2015. Then, on 3rd December 2014, during his Autumn Statement, the Chancellor, George Osborne, announced a very similar reform to SDLT.
The changes made to the rates of tax and the thresholds by the Chancellor were immediately introduced UK wide. These new SDLT rates were different from the Scottish LBTT rates which were due to take effect in April, therefore making it significantly more expensive in Scotland to buy a property in excess of £254,000 than it would be to buy a similar priced property in the rest of the UK.
Initially, the Scottish Government estimated that 80% of home buyers would be either no worse off or better off under LBTT than the recently reformed SDLT. However the effects would be felt differently in various parts of Scotland, especially in Aberdeen due to the significantly higher property prices. For example, to purchase an averaged priced detached house in Aberdeen (£360,000), the tax payable under SDLT (and applicable to Scotland until 31st March 2015) is £8,000. The amount due in Scotland on such a property was to be £13,300 under the initial Scottish Government LBTT proposals.
In light of these substantial differences in tax payable from April 2015, the Deputy First Minister, John Swinney, announced on Wednesday 21st January further changes to the Scottish tax rates. Initially, the progressive tax payable on properties over £250,000 was charged at 10%, however, this has subsequently been reduced to 5%.
These are the comparable tax rates:-
| Rest of the UK | Scotland |
| 0% up to £125,000 | 0% up to £145,000 |
| 2% £125,000 – £250,000 | 2% £145,000 - £250,000 |
| 5% £250,000.01 - £925,000 | 5% £250,000.01 - £325,000 |
| 10% £925,000.01 - £1,500,000 | 10% £325,000.01 – 750,000 |
| 12% £1,500,000.01 and above | 12% £750,000.01 and above |
When comparing both tax systems, those purchasing over £330,000 will pay more tax in Scotland. Considering the average priced detached house in Aberdeen will cost £360,000, this new tax system will affect Aberdeen a great deal more than in other parts of Scotland. However, on such a property the amount payable will be £9,350 rather than £13,000 as would have been the case under the rates proposed last October.
Here are figures to illustrate the changes:-
| Purchase Price | SDLT (rest of the UK) | LBTT (Scotland from 1st April 2015) | Difference Payable |
| £150,000 | £500 | £100 | Saving £400 |
| £275,000 | £3,750 | £3,350 | Saving £400 |
| £450,000 | £12,500 | £18,350 | Costing £5,850 |
| £600,000 | £20,000 | £33,350 | Costing £13,350 |
2014 was a good year for both property sale volumes and sale prices in the Aberdeen area, with a number of sales and prices returning to levels not seen since the 2008 downturn. Since December 2014, lower priced properties have been benefiting from the lower rates of tax and come 1st April 2015 will benefit further. Although higher priced properties in Scotland will pay more tax than is applicable in the rest of the UK, the differences in tax payable are not so steep and controversial, as were initially proposed, and therefore the affect on the property market, it can be assumed, will not be drastic or devastating, with the possible exception of properties at the very top end of the market where the increase in tax will be significant.
For further information regarding SDLT/LBTT or property purchase or sale generally, please contact Brian Sutton by email at This email address is being protected from spambots. You need JavaScript enabled to view it. or on 01224 581581.