LBTT an increasing source of government revenue – Daily Business

Scotland’s residential sales property tax take has climbed to a record £760 million, with seven in ten home sales now subject to Land and Buildings Transaction Tax (LBTT), the country’s equivalent to stamp duty.

Analysis by Scottish property firm Rettie shows residential LBTT revenues increased by around 13% in 2025/26, driven by rising house prices and a modest increase in transactions.

When LBTT was introduced in 2015, just over half of Scottish property transactions exceeded the £145,000 threshold at which the tax becomes payable. That figure has now risen to around 70%.

Rettie says the figures demonstrate the growing importance of LBTT to Scotland’s public finances, but also highlight how dependent revenues have become on a relatively small number of higher-value property transactions.

More than a third of Scottish sales are now above £250,000, compared with 16% when LBTT was introduced. Around 95% of LBTT revenue is generated by homes selling for more than £250,000, while properties above £750,000 account for just 1% of sales but 22% of revenues.

Edinburgh remains Scotland’s LBTT powerhouse, generating an estimated £95m in LBTT in 2025/26, compared with around £62.5m in Glasgow. Five of Scotland’s ten highest LBTT-generating postcode districts are in the capital.

EH10, which includes Morningside, tops the national table, generating an estimated £17.5m, followed by EH4, covering areas including Barnton and Cramond, at £12.9m.

The Additional Dwelling Supplement (ADS), charged on second homes including buy-to-let purchases, is also becoming an increasingly important source of revenue. Following increases in the tax rate, most recently from 6% to 8% in December 2024, ADS now accounts for around 33% of residential LBTT revenue, up from approximately 27% in mid-2025.

Dr John Boyle, director of research and strategy at Rettie, said: “Residential LBTT continues to be an effective revenue source for the Scottish Government, pushing towards £800m per year, around four times the level when it was first introduced.

“With little adjustment to bands since 2015, more sales are now captured and at higher tax levels. However, the tax continues to be dependent on certain geographies, notably Edinburgh, and on the small proportion of sales over £750,000.”

He added: “With LBTT revenues at record levels, there is a strong case for looking more closely at how property taxes influence people’s behaviour and the wider housing market.

“We would like to see the Scottish Government undertake proper behavioural analysis of LBTT to understand how the tax take can be optimised without depressing transactions.

“Revenues may be rising, but they remain heavily reliant on a relatively small number of higher-value sales and certain parts of the country. In that sense, this is a substantial tax take resting on relatively small supporting pillars.”