Example 2: Acquisition of a second home within the nil rate band

This worked example applies the LBTT rates and bands for residential transactions with an effective date prior to 15 July 2020 or after 31 March 2021 and the amount of tax shown is for illustrative purposes only.

Example:

Robin purchases a dwelling for a consideration of £45,000. It is the first and only dwelling owned by him. ADS does not apply to an individual’s first purchase of residential property and LBTT only becomes payable for transactions over £145,000, so no LBTT is due for this transaction.

Robin then purchases an additional dwelling for a consideration of £50,000 and does not dispose of his first dwelling. The ADS will therefore apply to the purchase of this additional dwelling and is calculated on the whole purchase price of the transaction.

The overall LBTT that will be payable for the new purchase is worked out as follows:

LBTT payable under standard residential LBTT rates:

£0 (as purchase price is within the nil rate band for residential property transactions)

ADS payable on whole purchase price of £50,000:

4% of £50,000 = £2,000

Total LBTT including ADS due (£0 + £2,000) = £2,000