|Rates pre 25 January 2019||New Rates from 25 January 2019|
|LBTT on non-residential property||Up to £150,000||0%||Up to £150,000||0%|
|£150,001 - £350,000||3%||£150,001 - £250,000||1%|
|Over £350,000||4.5%||Over £250,000||5%|
The new non-residential LBTT rates benefit purchasers whose properties fall below a certain threshold (~£300,000).
Take for example a non-residential property purchased for £275,000. Under the old rates the LBTT would have been £3,750, whereas under the new rate the tax will be £2,250.
A residential purchase for the same amount would attract tax of £3,350.
It is also interesting to note that where a transaction involves a mix of both residential and non-residential property (e.g. a Landed Estate, or a shop with a flat above it), it is generally treated as a non-residential transaction. The Revenue Scotland guidance confirms that a property will be non-residential if the main-subject matter of the transaction consists of or includes an interest in land that is non-residential property. Having said that though each transaction needs to be considered on its own merits - there can be arguments about what the main subject matter actually comprises.
The rules on Additional Dwelling Supplement remain the same, and the usual reliefs and exceptions apply. Unlike LBTT, if you are buying a second property that has both residential and non-residential elements, ADS will apply. However, it will only apply to the amount of the purchase price relating to the residential element (calculated on a just and reasonable basis).
So, say our theoretical £275,000 property is a residential house but as part of the same purchase we're also getting some commercial property worth £200,000, and that you already own a house worth £75,000. You will pay LBTT at the non-residential rate for the total price of £475,000 (£12,250) and you will also pay ADS on the £275,000 (£11,000), since you already own a residential property worth more than £40,000. This gives you a total tax bill of £23,250.