If you buy commercial property in Scotland, you pay Land and Buildings Transaction Tax (LBTT) at 0% on the first £150,000, 1% on the portion from £150,001 to £250,000 and 5% above £250,000. For a new commercial lease, LBTT is charged on the net present value (NPV) of the rent at 0% up to £150,000, 1% from £150,001 to £2 million and 2% above £2 million. Lease premiums are taxed separately, and leases need returns throughout their life, not just at the start.
LBTT replaced Stamp Duty Land Tax in Scotland in April 2015 and is collected by Revenue Scotland. The non-residential rates were left unchanged in the Scottish Budget for 2026 to 2027. This guide explains how the tax is calculated, with worked examples.
LBTT on buying commercial property
Non-residential LBTT applies to purchases of offices, shops, industrial units, land, and other property that is not residential. The current rates, which have applied to transactions with an effective date on or after 25 January 2019, are:
| Purchase price band | LBTT rate |
|---|---|
| Up to £150,000 | 0% |
| £150,001 to £250,000 | 1% |
| Above £250,000 | 5% |
Like income tax, each rate applies only to the part of the price within that band.
Worked examples
- £145,000 shop unit: the whole price falls within the 0% band, so no LBTT is due.
- £300,000 office suite: 0% on £150,000 (£0), 1% on £100,000 (£1,000) and 5% on £50,000 (£2,500). Total LBTT: £3,500.
- £465,000 industrial unit: 0% on £150,000 (£0), 1% on £100,000 (£1,000) and 5% on £215,000 (£10,750). Total LBTT: £11,750. This is the example used by Revenue Scotland.
- £1,000,000 investment property: £0 plus £1,000 plus 5% on £750,000 (£37,500). Total LBTT: £38,500.
VAT matters: if VAT is charged on the purchase, for example because the seller has opted to tax the property, LBTT is calculated on the price including VAT. Check the VAT position early, because it can significantly increase the tax.
LBTT on commercial leases
When a non-residential lease is granted, LBTT is calculated on the net present value (NPV) of the rent payable over the full term of the lease. NPV discounts future rent payments to reflect their value today, using a discount rate of 3.5% a year. Revenue Scotland provides an online calculator.
| NPV of rent | LBTT rate |
|---|---|
| Up to £150,000 | 0% |
| £150,001 to £2,000,000 | 1% |
| Above £2,000,000 | 2% |
These rates have applied since 7 February 2020.
Worked examples
- Lease with an NPV of £120,000: within the 0% band, so no tax is due, and normally no return is needed unless a premium is paid.
- Lease with an NPV of £500,000: 1% on £350,000. LBTT: £3,500.
- Lease with an NPV of £2,500,000: 1% on £1,850,000 (£18,500) plus 2% on £500,000 (£10,000). LBTT: £28,500.
Lease premiums
A premium is a capital sum paid for the grant of a lease, separate from the rent. Premiums are taxed at the same rates as non-residential purchases. However, where the average annual rent is £1,000 or more, the 0% band does not apply to the premium, so the first £150,000 of the premium is taxed at 1%.
When do you need to submit a return?
An LBTT return must be submitted, and any tax paid, within 30 days of the effective date of the transaction, which is usually the date of entry or when the purchase or lease is completed. A lease is notifiable, so a return is needed even if no tax is due, if the NPV of the rent exceeds £150,000 or a chargeable premium is paid.
Three-yearly lease review returns
Scotland has an extra requirement for leases. For notifiable leases with an effective date on or after 1 April 2015, the tenant must submit a lease review return:
- every three years from the effective date,
- when the lease is assigned, and
- when the lease ends.
At each review, the tax is recalculated using the actual rent paid, which may result in more tax, or a repayment. Missing these returns is a common and costly oversight, especially when a business takes over a lease by assignation and inherits the obligation. Late returns and late payments can attract penalties and interest.
Reliefs
Several reliefs can reduce or remove LBTT on commercial transactions, including group relief for transfers between companies in the same group, sale and leaseback relief, charities relief and relief for certain public bodies. Reliefs must normally be claimed on the LBTT return, and some can be withdrawn if circumstances change within a set period.
Do you need a solicitor?
In practice, the solicitor acting on your purchase or lease usually calculates the LBTT, submits the return and pays the tax on your behalf. A specialist commercial property solicitor will also check VAT, reliefs, lease review obligations and how the lease is structured, which can make a significant difference to the tax. Compare the leading commercial property solicitors in Glasgow, or see our ranking of conveyancing solicitors in Glasgow for residential purchases.
Frequently asked questions
What are the LBTT rates for commercial property in Scotland?
0% on the first £150,000, 1% on £150,001 to £250,000 and 5% above £250,000. These rates were unchanged in the Scottish Budget for 2026 to 2027.
How much LBTT is due on a £300,000 commercial property?
£3,500: nothing on the first £150,000, £1,000 on the next £100,000 and £2,500 on the final £50,000.
How is LBTT calculated on a commercial lease?
On the net present value of the rent over the lease term: 0% up to £150,000, 1% from £150,001 to £2 million and 2% above £2 million.
When must an LBTT return be submitted?
Within 30 days of the effective date of the transaction, together with any tax due.
What is a three-yearly LBTT lease review return?
For notifiable leases granted on or after 1 April 2015, tenants must submit a return every three years, on assignation and when the lease ends, so the tax can be recalculated on the actual rent.
Is LBTT charged on VAT?
Yes. If VAT is payable on the price, LBTT is calculated on the VAT-inclusive amount.
Conclusion
So, how much LBTT will you pay on a commercial property or lease in Scotland? For purchases, 0%, 1% and 5% on the slices of the price above £150,000 and £250,000. For leases, 0%, 1% and 2% on the NPV of the rent above £150,000 and £2 million, plus tax on any premium. Remember that leases need review returns every three years, on assignation and at the end.
For help with a purchase or lease, compare the leading commercial property solicitors in Glasgow.