Scottish Government’s LBTT revenue falls - with commercial property revenue significantly down

28 Jun 2017

Scottish Government’s LBTT revenue falls with commercial property revenue significantly down while second homes tax now accounts for nearly a quarter of all LBTT revenues.

Official figures released by Revenue Scotland and analysed by the Scottish Property Federation (SPF) have shown Land and Building Transaction Tax (LBTT) revenue has fallen from April to May 2017.

Overall, May 2017 saw LBTT revenues fall £3.2m to £43.5m compared to April 2017.  The major factor in this month’s decline is a drop in commercial property LBTT of a third from £17.9m in April 2017 to just £12.3m collected in May 2017.

Residential property revenue has slightly increased compared to April (up from £19.3m to £20.7m).  However, if replicated over the year these revenues would still leave the Scottish Government considerably short of the residential SDLT in Scotland in its final year where it returned £275m (2014-15). 

The LBTT revenue is boosted considerably by the second homes 3% ‘slab tax’ (called the Additional Dwellings Supplement, or ADS for short) which by itself generated £10.5m in the month (up from £9.6m in April) and accounted for nearly a quarter of all LBTT revenue (£43.5m) in May 2017.

David Melhuish, director of the Scottish Property Federation said:

“The commercial property market is a factor of the wider economy. The drop to negative economic growth in recent months suggested a drop in commercial LBTT revenues was to be expected.  However, losing a third of revenue is disappointing and suggests a commercial property sales market with weak activity currently.  If this trend is not significantly reversed, then the commercial element of LBTT will again fall well short of expectations.

“Looking at the wider picture, it is significant that the newest LBTT tax, the Additional Dwelling Supplement, provided nearly a quarter of all LBTT revenue in May.  The non-second homes residential market did produce slightly more LBTT than in April, but without the second homes slab tax, it would not be providing the growth in revenues expected by the government. 

“If the 10% residential LBTT threshold could be raised to £500,000 from its current level of £325,000 we believe this would stimulate more activity as it would help transactions through alleviating the tax burden for this level of the market.  More transactions at this level of the market would significantly boost not just the property markets and related economic activity, but also the government’s revenue.” 


Notes to Editor

LBTT figures from Revenue Scotland can be found here.

About the Scottish Property Federation

As a membership organisation the Scottish Property Federation (SPF) is the voice of Scotland’s real estate industry.  Established in 2007, SPF represents 185 organisations operating in Scotland.   We include among our members: property investors including major institutional funds, developers, landlords of commercial and residential property, and professional property consultants and advisers.  The SPF works closely with those who advise and decide on public policy in Scotland to ensure that they are aware of the consequences of their decisions for the property industry and wider economy.  

As part of the British Property Federation we also benefit from close links with the leading UK property companies and investors in the UK as well as the BPF's contacts with Westminster.

For more information, please visit or follow us on Twitter @ScotPropFed.