David Alexander

The firm said that although the latest LBTT statistics revealed another record high figure of £758.1m in the 12 months from July 2025 to June 2026 the rate of increase has slowed substantially in recent months rising just a couple of million pounds.

When LBTT was introduced in April 2015 it raised £201.9m in its first year while Additional Dwelling Supplement (ADS) – which wasn’t introduced until April 2016 – brought in £76.1m.

The latest 12-month period shows that of the £756.6m brought in by LBTT ADS raised £230.0m which is a 300 per cent increase in a decade. However, while this is 28.9 per cent of the total raised and is £51.6m higher than the previous year the overall percentage is falling.

The tax is also widening its reach with the number of buyers not paying LBTT in 2015 standing at 52.4 per cent but by June 2026 this number had dropped to 29.9 per cent meaning 70.1 per cent of all buyers now pay a levy for simply buying a home.

Almost all the residential taxes raised arose from properties sold for more than £325,001 when a 10 per cent levy is imposed. The 21,320 transactions above this threshold collected £441.1m which is 83.5 per cent of the total £528.1m raised in LBTT (this is the figure for residential sales with the ADS figures removed). This means that the average tax levied per homebuyer was £20,820.

David Alexander, chief executive officer of DJ Alexander Scotland, said: “The statistics show that the rate of revenue increases is stalling. This could well be because of market conditions but may also be due to individuals and investors becoming more unwilling to pay such a high level of property taxation.

“Just last week there was a report by the Tax Policy Associates which showed that following the introduction of a 48 per cent top rate of personal taxation in Scotland there has been a fall in revenue of an estimated £22m in one year rather than the expected increase. Some commentators are citing this as an example of the Laffer curve coming into play where money raised from ever increasing taxation suddenly reaches a tipping point and the amount of revenue actually falls because taxpayers change their habits.”

Mr Alexander continued: “There are already 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 causes 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.

“This is inevitable as there must come a point at which homebuyers’ ability to pay more tax for simply purchasing a property becomes untenable. The recent call by the Housing, Communities and Local Government (HCLG) committee for a review into property taxes because they view these as having a negative impact on housing activity is a sensible one and reflects an understanding that the housing market is integral to the health of the economy but that punitively taxing the process has a detrimental impact in the long term.”

He concluded: “Given the enormous sums being raised through the Additional Dwelling Supplement (ADS) from landlords, property investors and second homeowners, it is only natural that they too may be losing their enthusiasm for the huge charges made in Scotland compared to the rest of the UK.

“What is often forgotten by legislators is that higher rate taxpayers and people wanting to buy more expensive homes always have the option of adjusting their behaviour by moving to a much lower taxed economy which, in the case of Scotland, is just over the border. The assumption that higher taxes always produce higher revenues is untrue and we may be beginning to see the fruits of this in personal and property taxation.”