Property purchase taxes compared: SDLT, LBTT and Land Transaction Tax

Buying a home in the UK means paying a tax on the purchase, but the tax you pay, the rates you pay and the body you pay it to all depend on which country the property is in. In England and Northern Ireland it is Stamp Duty Land Tax (SDLT), collected by HM Revenue and Customs (HMRC). In Scotland it is Land and Buildings Transaction Tax (LBTT), collected by Revenue Scotland. In Wales it is Land Transaction Tax (LTT), collected by the Welsh Revenue Authority¹.

The three taxes do the same job but are set separately, and the differences are large enough to change what a purchase costs. Scotland's residential nil rate band starts at £145,000, Wales has no first-time buyer relief at all, and the surcharge on second homes is 8% in Scotland against five percentage points added to the standard rates in England and Northern Ireland⁴. This page compares the three systems side by side: the bands, the reliefs, the second-home surcharge, and what happens with returns, refunds and late payment.

Which tax you pay depends on where the property is

The rule is simple: the tax follows the land, not the buyer. You do not pay SDLT if you buy a property in Scotland on or after 1 April 2015, because LBTT applies there instead¹. Equally, you do not pay SDLT on a property bought in Wales from 1 April 2018, because LTT replaced it there². LBTT was introduced on 1 April 2015 as a fully devolved replacement for SDLT, charged on the purchase of land or property in Scotland above a certain value³.

Each tax has its own collector. SDLT revenues for England and Northern Ireland go to HMRC, LBTT revenues for Scotland go to Revenue Scotland, and LTT revenues for Wales go to the Welsh Government⁴. Revenue Scotland manages and collects the devolved taxes while the Scottish Government sets the policy behind them⁹, and the equivalent split applies in Wales.

The devolution of these taxes is part of a wider pattern. Scotland and Wales now set several of their own taxes, including income tax, and property transaction taxes are among the most visible differences for anyone moving house. If you are moving between countries within the UK, the tax bill on your new home can change even when the price does not, so it is worth knowing which system applies before you budget. The wider differences between the nations, from income tax to council tax, are covered elsewhere on this site.

Tax is charged only on the slice above each threshold

All three taxes work on the same principle: the rate for each band applies only to the part of the price that falls within that band, not to the whole price. Revenue Scotland states this directly for LBTT: the percentage rate for each band is applied only to the part of the price over the relevant threshold and up to the next threshold⁵. This is the "marginal" system, and it replaced the older slab approach under which the rate applied to the entire price once a threshold was crossed.

The practical effect is that moving a few pounds over a threshold only changes the tax on the slice above it. In Scotland, a residential price above £145,000 to £250,000 is taxed at 2% on the part of the price in that band, not on the whole price, and the first £145,000 is taxed at 0%. If you buy a property for less than the relevant threshold, there is no tax to pay at all⁵.

LBTT residential rates: 0% up to £145,000

For residential property in Scotland, the 2026-27 rates and bands are unchanged from their current level, as the Scottish Budget confirmed⁷. The nil rate band runs up to £145,000, then the rate steps up through 2%, 5%, 10% and 12% as the price rises⁷.

The comparison with SDLT matters for anyone weighing a purchase on either side of the border. SDLT's residential nil rate band runs only up to £125,000, and its next band, at 5%, covers prices from £250,001 to £925,000⁶. Scotland's structure therefore gives more room at the bottom: when LBTT was designed, the Scottish Government noted that a buyer purchasing an average-priced home in Scotland, £162,000 at the time, would either pay less tax or be exempt altogether compared with the old system³.

House prices in Scotland remain well inside the lower bands for most buyers. Official statistics on the Scottish housing market put the mean loan-to-value ratio for first-time buyers at 83.5% in the fourth quarter of 2025, slightly down on the previous quarter¹³, which indicates typical purchases clustered at moderate prices where the nil rate band and the 2% band do most of the work.

First-time buyer relief: nil rate up to £175,000

Scotland gives first-time buyers a higher nil rate band. The relief increases the residential nil rate band of LBTT to £175,000, so an eligible first-time buyer pays no LBTT on the first £175,000 of the purchase price⁸. In legislation, the relief consists in the tax not being chargeable in respect of the first £175,000 of consideration¹⁴.

The saving is capped. Revenue Scotland states the relief increases the nil rate threshold from the standard £145,000 to £175,000, potentially relieving up to £600 in tax⁹. The relief was introduced in 2018, and by the end of November 2025 almost 105,000 first-time buyers had benefited, saving up to £600 of tax each⁷.

The relief is not unlimited: it applies to qualifying first-time purchases of entirely residential property, and where relief is withdrawn the taxpayer must make a further LBTT return to Revenue Scotland⁹.

The contrast with the rest of the UK is sharp. SDLT's first-time buyer relief exempts the first £300,000 of the price, provided the total purchase price does not exceed £500,000; any value between £300,000 and £500,000 is taxed at 5%, and above £500,000 the relief is not available at all¹². Wales, notably, has no first-time buyer relief for LTT¹². A first-time buyer in Wales pays under the standard bands from the first threshold upwards, while an equivalent buyer in Scotland pays nothing on the first £175,000.

Additional Dwelling Supplement: 8% on second homes and buy-to-let

Scotland charges an extra levy, the Additional Dwelling Supplement (ADS), on top of LBTT when you buy an additional residential property. It is charged if you buy a residential property in Scotland and you already own one or more residential properties anywhere in the world, or if any buyer in a joint purchase already does, and you are not replacing your main residence⁹. The supplement applies to purchases of relevant residential properties for £40,000 and above⁷.

For transactions on or after 5 December 2024 the ADS is 8% of the purchase price⁹. It has risen in steps: 3% before 25 January 2019, 4% from that date, 6% from 16 December 2022, and 8% from 5 December 2024⁹. Where a contract was entered into on or before 4 December 2024 but the transaction completed later, the 6% rate can still apply under transitional provisions⁹.

The equivalent SDLT higher rates for additional dwellings in England and Northern Ireland are currently five percentage points above the standard residential rates¹². In legislation, those SDLT higher rates run at 5% on the portion up to £125,000, 10% on the portion above £250,000 up to £925,000, and 15% on the portion above £925,000 up to £1,500,000¹⁵. Wales charges its own higher rates on additional residential purchases: from 11 December 2024 the first band, £0 to £180,000, is taxed at 5%, and the second band, more than £180,000 but not more than £250,000, at 8.5%, with 15% applying in the fifth band above £750,000 up to £1,500,000¹⁶. The tax rates and bands for higher residential rate transactions in Wales were otherwise unchanged from those effective from October 2022¹⁸.

The ADS will not apply in several situations: if you only own one dwelling at the end of the effective date, if the consideration is less than £40,000, if you own an additional property valued at less than £40,000, or if you have disposed of your only or main residence in the 18 months before purchasing your new main residence⁹. You calculate the ADS alongside your LBTT, include it on the LBTT return and pay it at the same time as your LBTT⁹.

Getting the Additional Dwelling Supplement back after selling your old home

The ADS is not always kept. A repayment can be claimed if you sell your previous property within 36 months of buying your new one, the property sold was your only or main residence at any time in the 36 months before you bought the property you paid ADS on, and you have lived in the property you paid ADS on as your only or main residence⁹. For transactions up to and including 31 March 2024, the 36 months is an 18-month period instead⁹. For transactions with an effective date on or after 1 April 2024, only one of the buyers in a joint purchase needs to meet the first two conditions, but both must meet the third; for spouses, civil partners and co-habitants there are special rules along the same lines⁹.

Revenue Scotland aims to process repayment claims within 10 working days and repays the ADS with interest, at the higher of 0.5% per annum and the Bank of England Base Rate⁹. Repayment claims can be made as a taxpayer or via an agent⁹. Revenue Scotland routinely conducts checks and may open enquiries to ensure the correct amount of tax has been paid and that claim requests meet the relevant conditions, and it can withhold repayment pending the outcome of enquiries²¹.

The parallel systems work similarly but not identically. An SDLT refund is available if you paid the higher rates on the purchase of a new main home but have since sold your previous main home, and you must have sold the previous main home within 3 years of buying the new property unless exceptional circumstances apply²². The SDLT claim is made online or on form SDLT16, posted to HMRC, and needs details of both properties, the tax paid and the repayment recipient's bank account²³. In Wales, the return for the acquisition of the new main residence must be made after the sale of the old main residence has occurred, and cannot be made in anticipation of the subsequent sale²⁴.

What LBTT does not cover

Several transactions fall outside LBTT altogether. A property left to you in a will is excluded from the return requirement, and Revenue Scotland guidance covers an exemption for a land transaction which changes the terms of a will or intestacy so that a different person inherits²⁵. In short, these are taxes on purchases for consideration, not on inheritances or gifts.

The threshold rules also exclude small transactions. A return is only required where the price or value of the property or land is £40,000 or more²⁵, and if you buy a property for less than the relevant threshold there is no LBTT to pay⁵.

Cross-border purchases cannot be pooled. HMRC guidance states that where SDLT applies to a transaction it cannot be linked with any transaction where LBTT applies, even if it includes land in Scotland, and the same applies to transactions where LTT applies, even if they include land in Wales²⁷. Welsh guidance likewise tells buyers to exclude any part of a transaction subject to SDLT in England or LBTT in Scotland when working out LTT²⁸. Each purchase is taxed under its own country's rules, separately.

Non-residential and commercial property rates

Commercial property, land and mixed-use purchases are taxed on separate rate schedules in all three countries. In Scotland, LBTT applies to commercial land and buildings transactions, including commercial properties and commercial leases, where a chargeable interest is acquired⁵. The non-residential nil rate band runs up to £150,000⁷.

SDLT similarly taxes non-residential transactions at 0% up to £150,000 and 5% above £250,000, but imposes 2% on the £150,001 to £250,000 band¹². In Wales, LTT non-residential and mixed-use transactions have a 0% band up to £225,000, with 6% applying above £1,000,000¹².

Do not confuse these transaction taxes with non-domestic rates, also known as business rates, which are a tax on non-domestic properties to help pay for local council services in Scotland and are charged annually on occupation rather than on purchase²⁹. A commercial buyer may face both: the transaction tax on the day of purchase and business rates thereafter.

Filing the return and paying within 30 days

In Scotland, if a transaction is notifiable for LBTT, a return must be made to Revenue Scotland within 30 days of the effective date, and any tax, including the ADS, is paid at the same time²⁰. In Wales, the organisation paying the return likewise has 30 days after the effective date to submit and pay the LTT return³⁰. England and Northern Ireland are stricter on timing: the SDLT return and any tax must be sent and paid within 14 days of the effective date of the transaction³².

In practice the return is normally handled by your solicitor as part of the conveyancing, but the responsibility for its accuracy sits with the buyer, and Revenue Scotland can check it later. The effective date is usually the date of completion, so the clock starts on the day you become the owner, not the day you instruct your solicitor.

Late payment, penalties and what to do if you cannot pay

Missing the deadlines has consequences. If an LBTT return is not received for more than 6 months, an extra penalty of £300 or 5% of any unpaid tax, whichever is greater, can be imposed³³. Penalties can also follow inaccurate claims: any omission, error or inaccuracy in a repayment claim may render you liable to financial penalties or prosecution²¹.

If you disagree with a penalty imposed by Revenue Scotland, you have a statutory right to request a review or to appeal to the Scottish Tribunals. A review is not required before appealing, and an appeal to the tribunal is still possible if you are unsatisfied with the review outcome³³.

If you cannot pay a tax bill on time, help exists. Scottish Government cost of living guidance advises contacting HM Revenue and Customs if you cannot pay your tax bill on time, as you could get more time to pay or pay in instalments³⁴. The equivalent conversation with Revenue Scotland is worth having early, since penalties are assessed by reference to how late the return and payment are³³.