Corporate Tax & Incentives

Now that the dust has settled from the Christmas period, and we emerge, blinking, into 2019, it is important to remember an announcement made in December’s Scottish Budget by Derek Mackay, the Cabinet Secretary for Finance, Economy and Fair Work which results in a number of changes to the LBTT rates that take effect from later this month.

Changes to the non-residential rates

For purchases with an effective date on or after 25 January 2019 the non-residential rates of LBTT are amended to the following:-

The increase in the top rate from 4.5% to 5% means that the headline rate of LBTT is now the same as SDLT.

Additional Dwelling Supplement (ADS) increase

Mr Mackay also made the unexpected announcement that the rate of ADS will be increased to 4% for purchases with an effective date on or after 25 January 2019.

This means that the general ADS rate for purchases in Scotland is higher than the SDLT 3% Higher Rate for Additional Dwellings (HRAD). However, the UK government has indicated that it will introduce an additional 1% surcharge for the purchase of residential property by non-residents. A consultation is to take place about this and details are expected later in January. It should be borne in mind that, while the proposed increase for SDLT HRAD will apply to non-residents only, the increase to ADS for LBTT will apply generally.

Transitional Rules

The new non-residential LBTT rates and the 4% ADS rate do not apply where a contract for the purchase was entered into prior to 12 December 2018 (which was the day of the Scottish Budget).

LBTT and ADS calculators

Revenue Scotland have amended their LBTT and ADS calculators on their website to take into account the new rates.

Please do get in touch should you have any queries regarding the changes announced by Mr Mackay. Brodies’ Corporate Tax & Incentives team will be more than happy to assist.

Adam Johnston

Solicitor at Brodies LLP
Adam is a Solicitor in our Corporate Tax & Incentives team. Adam focusses on the tax aspects of property transactions (LBTT, SDLT, VAT and Capital Gains Tax) as well as wider tax issues for both individual and corporate clients, and employee incentives work.
Adam Johnston