Scottish property tax revenues have reached another record high, prompting fresh warnings about the impact of transaction costs on buyers and investors.
Land and Buildings Transaction Tax (LBTT) generated £758.9m in the 12 months to August 2026, according to analysis by DJ Alexander. That represents an increase of £82m, or 12.1%, compared with the previous 12-month period.
Record monthly figures
Revenue Scotland’s latest monthly statistics show residential LBTT, excluding the Additional Dwelling Supplement (ADS), generated £52.3m in August alone. That was the highest August figure on record and 3% above August 2025.
DJ Alexander’s analysis shows ADS generated £228.1m over the latest 12 months. That was £45.8m, or 25.1%, higher than a year earlier and represented around 30% of total LBTT receipts.
Cooling in additional property tax
However, the latest monthly figures indicate some cooling. Gross ADS receipts reached £26.4m in August, down 4% year-on-year. The number of returns declaring ADS also fell 9% to 1,690.
The proportion of residential buyers falling outside the LBTT tax bands has also fallen sharply since the tax was introduced. DJ Alexander’s analysis suggests 52.4% of buyers paid no LBTT in 2015. By August 2026, that proportion had dropped to 30.9%.
The firm said 21,410 transactions above £325,000 generated £444m in residential LBTT over the latest 12-month period. That accounted for 83.6% of the £530.8m residential total excluding ADS.
Warning over impact on buyers
David Alexander, chief executive of DJ Alexander Scotland, warned that higher transaction costs could eventually affect housing activity. He said: “Whilst we are continuing to see a high level of revenue generated from LBTT there must come a point at which buyers will delay or even cancel their home purchases.
“Investors might be put off by the much more punitive tax regime in Scotland and transfer their assets to the rest of the UK or even abroad. There might be an element of market conditions in such choices but there is little doubt that a long-term highly taxed market will always discourage buyers.”
Alexander also argued that transaction costs could discourage existing homeowners from moving. He added: “Among individual homeowners there are signs that people in larger homes are holding off moving because the transaction costs are prohibitive and a block at any stage in the housing market can cause a stalling in sales.
“If there are no larger houses to move to those in smaller homes have fewer options and this impacts the market as a whole.”
Revenue Scotland’s August figures show 9,060 residential LBTT returns were submitted during the month. Of those, 2,680 fell into the band where no tax was due.
Alexander said the growing tax burden could also influence investment decisions by landlords and second-home buyers. He said: “The risk is that you put investors off even looking into Scotland because of legitimate concerns over the tax regime and the potential for further rises in the future. Once these investors are gone, they may be very difficult to get back.”
