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Self build second home Tax Scotland


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Hi all Scottish self builders,


I am in the planning process of a self build project, plot is north of Inverness. Architect is currently finalizing detailed drawings to submit for building warrant. 


I am keen to know from other self builders, how much Tax I will be liable to pay - both Second home Tax and / or Stamp duty? 

I am planning on keeping my current property.

Really can't find much information online. I'm sure a mortgage advisor will put me right but thought I would ask here. I am also interested in who knows what the average cost estimate is per m2 in the North east currently?I am building a 1.5 storey +- 250 m2. Any knowledge or advice would be warmly welcomed.

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As the house doesn't exist until it has a completion cert, it is not a second home, it just a piece of land.


Not sure what happens when it gets a completion cert, as you are not purchasing and that is when the second home tax gets charged.  So not likely to be due a tax charge then either.


You may have to or likely to, have to pay stamp duty on the profit made on any sale, as you have not lived in it, if you sell when completed.


Way to many variables to give an average price, depends on build spec, how it's being built and by whom.  What mine cost near Elgin, on a complex hill site, very well insulated etc, but with lots of my labour will not be reflective.  

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We did not pay any land tax on our plot or when it was completed, and I would not expect to if we sold it.  We will however be laiable for some capital gains tax when we sell our old house as we have not lived there for 5 years.

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The Scottish equivalent of Stamp Duty & second home tax is the Land and Buildings Transaction Tax and the Additional Dwelling Supplement. https://www.gov.scot/policies/taxes/land-and-buildings-transaction-tax/


LBTT applies to all land and property but only to transactions e.g. change of ownership.


The Additional Dwelling Supplement applies only if you are buying a "dwelling" - it does not apply if you are buying an empty plot, even if it has planning permission https://revenue.scot/taxes/land-buildings-transaction-tax/lbtt-legislation-guidance/additional-dwelling-supplement-ads-technical/ads-legislation-key-terms#LBTT10015 - NB it might apply if the plot has a building to be demolished/refurbished, and costs more than £40k.


If you already own the plot, building a house on it that you will also own is not a "land transaction" so there is no LBTT or ADS.


The only tax that will trigger when you build the house is council tax.


As others have said there may also be CGT when you eventually sell either your existing or new property, depending which has been your main home. You will be able to offset most of the cost of building the house as well as the original plot purchase, so you're only paying tax on your "profit". It would be worth keeping good records of your build costs so you have evidence for CGT deductions later.


Assuming the rules don't change, you will not pay any LBTT if/when you sell either : it is paid by the buyer.


Disclaimer: I'm not a lawyer or an accountant!



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  • 1 month later...
On 27/06/2022 at 20:36, andyscotland said:


Wow indeed. Although we looked into this last year when buying our plot and considered buying a house too and my solicitor was very non committal. I found the same info posted above 

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