Land & Buildings Transaction Tax (LBTT) revenue, including Additional Dwelling Supplement (ADS) on second homes, has reached a record high in Scotland of over £600m.
Analysis from property firm Rettie & Co has revealed that 63% of house sales are now over the minimum £145,000 threshold on which LBTT has to be paid, representing the highest proportion of transactions since the introduction of the tax in 2015/16.
John Boyle, director of research at Rettie & Co, said: “When LBTT was introduced, more than 50% of transactions fell under the £145,000 threshold.
“However, as house prices have risen, only around 37% now fall under the threshold.
“So, while it was once the case that a majority of Scots wouldn’t pay a housing transaction tax, almost two-thirds of sellers will now be subject to LBTT.”
The 2022/23 figures are driven by what Rettie describes as “rising prices and a relatively strong sales market”, although LBTT receipts by Revenue Scotland are expected to contract by around 16% in the year to 31 March 2024.
Boyle added: “Looking at the count of monthly LBTT receipts, there was a marked downturn from October onwards when interest rates and mortgage costs began to rise suddenly and steeply.
“With transactions likely to fall this year, this will impact on property tax revenue.”
In terms of geography, Edinburgh generates an estimated 27% of LBTT revenue from 11% of the country’s house sales, while more broadly, sales over £750,000 generate 22% of LBTT revenue from around 1% of overall transactions.
Total LBTT revenue from Edinburgh was estimated to be over £128m in 2022/23, compared to the next highest area, Glasgow, which generated approximately £38m.
The average LBTT bill in Edinburgh was £11,720, compared to £3,288 in Glasgow, and £3,062 in Aberdeen.
The postcodes that generated the most revenue in 2022/23 were EH4 (including Barnton and Cramond), EH10 (including Morningside), EH12 (including Corstorphine and Murrayfield), EH3 (including Edinburgh New Town), and G77 (including Newton Mearns).
The highest average LBTT bill by area was in East Lothian at £37,000, followed by the south of Edinburgh at £28,000, and North Berwick at £27,000.
LBTT revenue generated by new build sales topped £100m for the first time in 2022/23.
Among the major homebuilders, CALA Homes generated the most LBTT receipts, at around 4% of all LBTT revenue, despite accounting for less than 1% of total sales activity in the market.
The highest average new build LBTT bill at any development was at The Old Course in St Andrews, which was more than £325,000.
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