Paragraph 4 of schedule 2A – The additional amount
31.Sections 25 and 26 of the 2013 Act provide for the general charge to LBTT being calculated on a “progressive” basis according to tables of rates and bands. There is a nil rate band which currently extends to £145,000, though transactions of £40,000 or above are “notifiable” and a tax return must be sent in to Revenue Scotland. As mentioned, that will continue to be the end of the matter for the most standard residential property transaction where an individual or couple purchase their main residence, (i.e. when they replace their existing one or buy their first one)
32.Where paragraph 2 or 3 of schedule 2A brings a transaction within schedule 2A an additional amount of tax is applied by paragraph 4, calculated on a “slab” basis. For “residential property transactions” this applies to the whole of the relevant consideration of the transaction, therefore the first £40,000 of consideration is relevant to the calculation. For such transactions between £40,000 and £145,000 this will mean that LBTT liability will be increased from nil. The applicable tax rate is 3%.
33.As mentioned, in some cases a transaction that is a “non-residential property transaction” will be within schedule 2A in which case sub-paragraph (3) of paragraph 4 introduces a new concept of “relevant consideration” which is the proportion of the chargeable consideration attributable to the dwellings and any subordinate real rights pertaining to the dwellings.
34.For chargeable transactions that involve the purchase of more than one dwelling, and one of the dwellings is a replacement main residence, the relevant consideration will be apportioned on a just and reasonable basis between the replacement main residence and the other dwellings purchased. The consideration attributable to the replacement main residence will not be subject to the supplement, whereas the consideration attributable to the other dwellings that form part of the chargeable consideration will be subject to the supplement.
35.Interpretative provisions of the 2013 Act relevant to paragraph 4—
| “chargeable consideration” | section 17 and schedule 2 |
| “chargeable transaction” | section 15 |
| “non-residential property transaction” | sections 24(4) and 59(8) |
| “residential property transaction” | section 24(3). |