Land & Buildings Transaction Tax holiday to end on 31 March 2021

Land and Buildings Transaction Tax (LBTT) is to revert to its pre-Covid-19 levels on 1 April. In her Budget statement on 28 January, Kate Forbes, the Cabinet Secretary for Finance announced that the threshold above which LBTT is to be paid would revert to its pre-pandemic level of £145,000 (£175,000 for first-time buyers).

This is a blow to those looking to purchase a new home in 2021 because if they don’t complete their purchase on or before 31 March and they’re buying for more than £145,000 (£175,000 for first time buyers), they’ll pay LBTT starting at 2% of the value of the property over that figure.

After lockdown last year, the threshold before which LBTT was paid was raised to £250,000. This meant that anyone buying a house up to that price didn’t pay any LBTT. It also meant that those who purchased for more than £250,000 would save £2,100 in LBTT.

Ironically, the amount of money generated through LBTT actually increased in the last quarter of 2020 when compared to the same quarter in 2019 and there was an argument that the LBTT threshold should have remained at £250,000 until the economy had sufficiently recovered later this year. That argument wasn’t accepted by the Finance Secretary.

Kate Forbes did point out that first-time buyers still enjoyed a saving of £600 compared to home movers because the threshold above which they pay LBTT is higher at £175,000. This takes most first-time buyers out of paying this tax.