Property tax in Scotland. What do I pay and when? 2025 Update
Are you thinking of selling & buying a new home in Scotland? Considering a move from elsewhere around the world to beautiful Scotland? There have been many changes to property tax in Scotland over recent years.
Here we explain everything about property tax in Scotland. What do I pay and when? Do I pay it when selling or buying?
Hopefully the below information will help simplify it all for you.
Land and Building Transaction Tax (LBTT)
What is LBTT?
For many many years we had a property tax called Stamp Duty here in Scotland. On the 1st April 2015 this was replaced with LBTT – Land and Building Transaction Tax. LBTT is a tax applied to purchases of residential property in Scotland. Therefore, you pay LBTT when buying a house, not when selling.
Is it paid on every residential property?
LBTT is paid on every residential property purchase in Scotland from the purchase price of £145,001. For purchases of £145,000 and below no LBTT is applicable.
How much is LBTT?
You pay a percentage on a certain apportionment of the purchase price. LBTT is payable as follows:
| Purchase Price | LBTT Rate |
| Up to £145,000 | 0% |
| £145,001 – £250,000 | 2% |
| £250,001 – £325,000 | 5% |
| £325,001 – £750,000 | 10% |
| £750,000 and above | 12% |
As a little example for you. If you buy a house for £200,000 you will pay no LBTT on the first £145,000. Then 2% on the remaining £55,000. Meaning your total LBTT payment would be £1,100. (On the basis you are not a first time buyer and do not own any other property)
A really great calculator that I use all the time is on the Scottish Government website. Click here
Additional Dwelling Supplement (ADS)
What is ADS?
The Additional Dwelling Supplement (ADS) was introduced by the Scottish Government back in April 2016. This additional tax, payable above & beyond LBTT, applies to all transactions involving the purchase of an additional residential dwelling over the value of £40,000. An additional dwelling includes the likes of a buy to let property or second homes.
Why was ADS property tax introduced?
There are various reasons why this additional property tax was introduced by the Government here in Scotland, but they say mainly to protect the opportunities for first time buyers. Ensuring wealthy people buying second homes didn’t gobble them all up leaving first time buyers with no properties to purchase at an affordable level.
It is really important to protect the opportunities for First Time Buyers, but ADS adds on a HUGE amount of tax. In my experience there is no doubt the introduction of ADS has deterred buyers from investing in a second home here in Scotland.
Not only that, but it was typically 4% of the purchase price, then in December 2022 it increased to 6%.
**2025 UPDATE** In the Scotland budget in 2025, announced in December 2024, it was increased again with immediate effect to 8%.
How much is ADS in Scotland 2025?
Here we look at what we pay for ADS and it is important to remember ADS payment is above and beyond the standard LBTT payment. This table should help you out and again the Scottish Government has a great calculator for you to use here
| Purchase Price | LBTT Rate | ADS Rate |
| Up to £145,000 | 0% | 8% (starts at £40k) |
| £145,001 – £250,000 | 2% | 8% |
| £250,001 – £325,000 | 5% | 8% |
| £325,001 – £750,000 | 10% | 8% |
| £750,000 and above | 12% | 8% |
Let’s calculate the LBTT & ADS that will be payable for a purchase at £300,000, on the basis you are not a first time buyer:
LBTT – 0% on first £145,000 – 2% on £145,001 to £250,000 – 5% on £250,001 to £300,000 = TOTAL £4,600
ADS – 8% of £300,000 = TOTAL £24,000
TOTAL: £28,600
That is a fair old amount of money! Lets get saving if we want that charming wee Scottish bothy as a holiday home. Property tax in Scotland can be steep to say the least.
Plus, ADS still applies if your second home purchase is a joint purchase and only one of you owns another home. So if you are a first time buyer, but your partner owns another property, and you decide to purchase a second home together then ADS will apply.
Who pays the property tax in Scotland?
Almost on every occasion the purchaser of the property is responsible for paying tax, and this will mostly be in the form of LBTT (Land & Building Transaction Tax).
If you’re the seller, you don’t have to pay LBTT, or any other property tax in Scotland. You will just pay all the necessary taxes when, and if, you purchase another property.
In a nutshell, as sellers you do not pay tax, but as buyers we nearly always pay tax. Clear as mud huh!
What do First Time Buyers pay in property tax?
First time buyers are still applicable to pay LBTT, the main property tax in Scotland. However, in 2018 the Scottish Government introduced a tax relief for First Time buyers. First time buyers do not pay LBTT on a property purchase at, and below, £175,000.
| Purchase Price | LBTT Rate |
| Up to £175,000 | 0% |
| £175,001 – £250,000 | 2% |
| £250,001 – £325,000 | 5% |
| £325,001 – £750,000 | 10% |
| £750,000 and above | 12% |
As another little example for you. If you are a first time buyer and you buy a house for £200,000 you will pay no LBTT on the first £175,000. Then 2% on the remaining £25,000. Meaning your total LBTT payment would be £500.
Saving you £600.
Property Tax in Scotland is unavoidable when you are purchasing and it can really be a mine field of numbers. Hopefully this gives you a good overview of the varying tax’s and who pays them.
These below posts may also be super helpful to you:
Moving from England to Scotland. The house buying process.