Unhappy anniversary for the transaction tax that targets homebuyers

The land and buildings transaction tax (LBTT) celebrated its tenth anniversary this April by collecting tens of millions of pounds in Scottish taxpayers’ money. Started in 2015 the revenue from this property tax reached an eye-watering £61m in one month.

This huge amount was received in April 2025 from 8,100 transactions, which is equivalent to £7,530 per property sold. Back in April 2015 there were 6,880 transactions and just £7m was collected, which is equivalent to just £1,017 per sale.

This is a 750 per cent rise in a decade. Are there any other taxes or prices which have risen by so much in such a short space of time? Obviously not, but this doesn’t seem to deter the Scottish Government, which believes that this tax hits those with the broadest shoulders. This is defined as those who buy a property with a value greater than £325,001 when the ten per cent LBTT rate applies. In England, this higher rate does not kick in until a property is worth more than £925,000.

With the average price of a property in East Renfrewshire now £302,052 and Edinburgh, East Lothian and Midlothian not far behind we are in a position where many more people – who would never consider themselves to be wealthy – will be hit by the much higher levels of property tax levied in Scotland.

But it’s not just those buying a £325,001 home who have the broadest shoulders and must pay more. First-time buyers (FTBs) in Scotland are also treated to higher taxes than their English counterparts. In Scotland LBTT starts at £175,000 for FTBs whereas in England they don’t start paying property tax until a home costs more than £300,000.

Ministers may argue that if you can afford to buy a £175,000 first home or a £325,000 property then you can afford to pay a higher rate of tax. It is doubtful, however, that this is a credible argument. What we have here is a tax which disproportionately punishes Scots homebuyers compared to their near neighbours.

Those living on the Border must be particularly upset that they may know people a few miles away in Berwick upon Tweed or Carlisle who save thousands of pounds when buying their home simply because of a slight difference in geography.

The other element of this tax which galls so many is that this additional money is not put to any obvious homes-related use. If homebuyers could see some benefits from their generosity in paying these substantial additional sums, then they may be more accepting of this higher taxation.

Instead, it all seems to disappear into an ever-expanding pot of government expenditure. Hypothecating this additional taxation directly into the housing sector could go some way to at least explaining why Scots – at all levels from first-time buyers to other home purchasers – are charged so much more for the fundamental right to have a home. At the moment there is little explanation of why this is occurring and what the money is being used for. Perhaps by the time of LBTT’s 20th birthday we shall have a clearer explanation. In the meantime, we must simply pay a lor more for buying a home.