Chwilio Deddfwriaeth

Land and Buildings Transaction Tax (Amendment) (Scotland) Act 2016

Operation of additional tax provisions

Example: Operation of additional tax provisions in relation to a purchase of second home
Note: references to provisions of legislation are references to provisions of the 2013 Act as amended by the 2016 Act
Justin and Brenda, a married couple, purchased their first home in the later part of 2015 and the transaction was subject to LBTT.  Justin and Brenda now propose to buy a second home for £105,000 in the later part of 2016, of which £5,000 is apportioned to moveables such as curtains.  But for the additional amount of tax there would be no LBTT payable because relevant consideration of £100,000 (paragraph 4 of new schedule 2A) is within the nil rate band for residential property transactions(4).
The additional amount applies because (i) the subject-matter of the transaction (section 61) consists of or includes the acquisition of ownership of a dwelling (Part 6 of schedule 5), (ii) at the end of the effective date (the tax point; section 63) Justin and Brenda own more than one dwelling, and (iii) Justin and Brenda are not replacing their existing home (paragraph 2 of new schedule 2A).  Because Justin and Brenda are married, the additional tax applies irrespective of whether title to the original and new houses are in the name of both Justin and Brenda, or in the name of one or the other (paragraph 6 of new schedule 2A).
The additional amount of tax applicable is £3,000, being 3% of the relevant consideration (paragraph 4 of new schedule 2A).  Therefore the total amount of LBTT payable is £3,000.
Were the chargeable consideration £200,000 for this second home purchase the calculation would be as follows:
Standard amount of LBTT payable
The first £145,000 falls within the nil rate band
The remaining £55,000 falls within the first tax band charged at 2%
The standard amount of LBTT payable is therefore £1,100
Additional amount of LBTT payable
The whole chargeable consideration of £200,000 is the “relevant consideration” and is charged at 3%
The additional amount of LBTT payable is therefore £6,000
Total amount of LBTT payable
The total amount of LBTT payable is the sum of the standard and additional amounts and is therefore £7,100

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