LBTT (stamp duty & ADS in Scotland

Nikster73

Due to the current announcement in Scotland today.  I was hoping we might've had some luck, but it doesn't look like it.  We are due to complete on our new house purchase next week - 17th July.  Our purchase price is over £250k, therefore we are still having to  paying LBTT.  I did read it says anyone buying a property over £250k will be £2100 better off? Is this correct? Should I be contacting my Solicitor? 
My main concern is that we have a second property and have been given an amount of £11,500 additional dwelling Supplement which is 4% in Scotland of the purchase price.  With the new rules in place, are we still liable to pay the full £11.500? Or do we only pay the remaining amount on anything over the £250k?  
For example.  If a property is £300k, would we only have to pay 4% on the additional £50k?  I'm hoping this is this case, but might be wrong.  Hoping someone can advise me correctly.

JonMitchell

Question - is this property that you are completing on the 17th your main residence or second home (additional dwelling supplement, be it BTL or holiday let)? I am assuming it is second home since you have been told £11,500 for additional dwelling supplement tax.
Assuming property is £287,500 based on your £11,500 figure 
If it is your main residence - you pay nothing up to £500K, saving SDLT £3975 (otherwise tax at 2% from £145K-£250K, 5% from £250K - £325K).
If it is not your main residence - you do not need to pay SDLT but you will be liable to pay the LBTT 4% flat rate, there is no property price band - which in this case of £287,500 is £11,500

Nikster73

Thanks for your reply.  
The entire process has been a nightmare for us.  We are also paying a 15% deposit on the new property we are buying, and ADS of £11k + fees etc.  Been hit with a bombshell, especially in the current situation!
The property we are completing on the 17th July, will be our main residence.  I have a flat in my name only ( which is a 2nd property)  this is why I have been told we are required to pay ADS.  Due to having 2 properties on the day of completion  (17th July)  we have to pay £11.5k ads.  We are in Scotland, so we are exempt up to £500k doesn't apply to us? The cut of figure here is £250k. 
Our Solicitor has sent us an invoice which is asking for the LBTT amount to be paid and the £11k ads.   This suggests that we are not entitled to any money off ( even with the new guidelines in place?)

JonMitchell

Nikster73 said:

Thanks for your reply.  
The entire process has been a nightmare for us.  We are also paying a 15% deposit on the new property we are buying, and ADS of £11k + fees etc.  Been hit with a bombshell, especially in the current situation!
The property we are completing on the 17th July, will be our main residence.  I have a flat in my name only ( which is a 2nd property)  this is why I have been told we are required to pay ADS.  Due to having 2 properties on the day of completion  (17th July)  we have to pay £11.5k ads.  We are in Scotland, so we are exempt up to £500k doesn't apply to us? The cut of figure here is £250k. 
Our Solicitor has sent us an invoice which is asking for the LBTT amount to be paid and the £11k ads.   This suggests that we are not entitled to any money off ( even with the new guidelines in place?)

Which solicitor firm are you using? They should know better by now, best challenge them on this. Or perhaps they have not watched the mini budget at all.
Are you planning to rent out your existing flat or sell later - if you are thinking of selling, you have a 1.5years period (I can't remember on head if they have change it to 1 yr recently) from the date of your date of entry of 17th July to sell. Once sold you are eligible to reclaim back the £11+k back from HMRC. 

newretiree

I don’t think a date has been announced for the change in LBBT in Scotland - just that it will be introduced for properties up to 250k. Could you hold off until the date is confirmed? The chancellor’s announcement doesn’t apply to Scotland.

JonMitchell

newretiree said:

I don’t think a date has been announced for the change in LBBT in Scotland - just that it will be introduced for properties up to 250k. Could you hold off until the date is confirmed? The chancellor’s announcement doesn’t apply to Scotland.

My apology Nikster73 - I just looked at the Revenue Scotland and they have not updated anything (https://revenue.scot/land-buildings-transaction-tax/tax-calculators).
Newretiree is right that the Chancellor's budget has not mentioned Scotland but many in Scotland are hoping for the stamp duty holiday too - assuming you have concluded your Missive, it will be beneficial for all parties to wait, agree on and delay the Date of Entry a bit. Unless your seller is not buying another property?
Sincere apology for my ill-advised comments above. 

davidmcn

JonMitchell said:

Nikster73 said:

Thanks for your reply.  
The entire process has been a nightmare for us.  We are also paying a 15% deposit on the new property we are buying, and ADS of £11k + fees etc.  Been hit with a bombshell, especially in the current situation!
The property we are completing on the 17th July, will be our main residence.  I have a flat in my name only ( which is a 2nd property)  this is why I have been told we are required to pay ADS.  Due to having 2 properties on the day of completion  (17th July)  we have to pay £11.5k ads.  We are in Scotland, so we are exempt up to £500k doesn't apply to us? The cut of figure here is £250k. 
Our Solicitor has sent us an invoice which is asking for the LBTT amount to be paid and the £11k ads.   This suggests that we are not entitled to any money off ( even with the new guidelines in place?)

Which solicitor firm are you using? They should know better by now, best challenge them on this. Or perhaps they have not watched the mini budget at all.
Are you planning to rent out your existing flat or sell later - if you are thinking of selling, you have a 1.5years period (I can't remember on head if they have change it to 1 yr recently) from the date of your date of entry of 17th July to sell. Once sold you are eligible to reclaim back the £11+k back from HMRC. 

The fact that there would be a cut in LBTT was only announced on Thursday (details here), and the commencement date (15 July) was only confirmed yesterday, so I presume the OP's solicitor had prepared the statement before that information was known. And it's Revenue Scotland who are responsible not HMRC.

JonMitchell

davidmcn said:

JonMitchell said:

Nikster73 said:

Thanks for your reply.  
The entire process has been a nightmare for us.  We are also paying a 15% deposit on the new property we are buying, and ADS of £11k + fees etc.  Been hit with a bombshell, especially in the current situation!
The property we are completing on the 17th July, will be our main residence.  I have a flat in my name only ( which is a 2nd property)  this is why I have been told we are required to pay ADS.  Due to having 2 properties on the day of completion  (17th July)  we have to pay £11.5k ads.  We are in Scotland, so we are exempt up to £500k doesn't apply to us? The cut of figure here is £250k. 
Our Solicitor has sent us an invoice which is asking for the LBTT amount to be paid and the £11k ads.   This suggests that we are not entitled to any money off ( even with the new guidelines in place?)

Which solicitor firm are you using? They should know better by now, best challenge them on this. Or perhaps they have not watched the mini budget at all.
Are you planning to rent out your existing flat or sell later - if you are thinking of selling, you have a 1.5years period (I can't remember on head if they have change it to 1 yr recently) from the date of your date of entry of 17th July to sell. Once sold you are eligible to reclaim back the £11+k back from HMRC. 

The fact that there would be a cut in LBTT was only announced on Thursday (details here), and the commencement date (15 July) was only confirmed yesterday, so I presume the OP's solicitor had prepared the statement before that information was known. And it's Revenue Scotland who are responsible not HMRC.

Agree it is Revenue Scotland who is responsible for LBTT.
I drew upon HMRC is on how OP can reclaim his/her Additional Dwelling Supplement tax back if he/she is to sell off the current flat he/she owned within the 1 - 1.5yr period. This is based on the assumption that SNP will not implement the same stamp duty holiday.  

Nikster73

The Fist Minister announced yesterday that it will take effect in Scotland from Wednesday 15th July 2020

Nikster73

I'm still unsure what now applies to us?  
Do we still pay the full LBTT (stamp duty) amount? and £11k additional dwelling? 

davidmcn

Nikster73 said:

I'm still unsure what now applies to us?  
Do we still pay the full LBTT (stamp duty) amount? and £11k additional dwelling? 

It's explained in the post immediately above yours ie it's discounted by the same amount as a normal purchase would be, but you still pay the same rate of ADS.