Example 1: Acquisition of a second home

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:

In December 2015, Liz purchased a dwelling for a consideration of £350,000. It was the first and only dwelling she owned. The LBTT payable under standard residential LBTT rates was calculated as follows:

0% on the first £145,000        = £0

2% on the next £105,000        = £2,100

5% on the next £75,000          = £3,750

10% on the next £25,000        = £2,500

LBTT due                               = £8,350

In May 2016, Liz purchases an additional dwelling for a consideration of £350,000 and does not dispose of her 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 purchase of her additional dwelling is calculated as follows:

LBTT payable under standard residential LBTT rates:

0% on the first £145,000         = £0

2% on the next £105,000        = £2,100

5% on the next £75,000          = £3,750

10% on the next £25,000        = £2,500

LBTT due                                    = £8,350

ADS payable on whole purchase price of £350,000:

4% of £350,000 = £14,000

Total LBTT including ADS due (£8,350 + £14,000) = £22,350