LBTT Divorce v Cohabitation Scotland: Guide | Rooney Family Law 12th, September , 2024

LBTT Divorce v Cohabitation Scotland: Complete Tax Guide

When facing a relationship breakdown in Scotland, understanding LBTT divorce v cohabitation Scotland implications becomes crucial for protecting your financial interests. Land and Buildings Transaction Tax affects property transfers differently depending on whether you’re married or cohabiting. Our experienced divorce lawyers specialise in LBTT divorce v cohabitation Scotland matters, helping clients navigate complex property transfers with expert guidance tailored to Scottish law.

As our name suggests, we only practise Family Law. Why? Because dealing with crucial issues affecting your children, relationships, or financial future, you deserve a solicitor who specialises in this area and practises it every day.

By dedicating ourselves solely to Family Law, specialists are free from the distractions and pressures of other legal fields. This allows us to provide the expert guidance you need for complex LBTT divorce v cohabitation Scotland situations.

While other firms split their attention between criminal cases, property disputes, and commercial law, we focus exclusively on family law 24/7. This means understanding every nuance of Scottish family legislation, every recent court decision that could impact your case, and every negotiation tactic that gets results.

When facing divorce, child custody battles, or complex financial settlements, do you want a generalist or Scotland’s most dedicated family law experts?

Understanding LBTT Divorce v Cohabitation Scotland: Key Legal Differences

Land and Buildings Transaction Tax (LBTT) replaced UK Stamp Duty Land Tax (SDLT) in Scotland from 1 April 2015. Specialist divorce lawyers understand that LBTT applies to residential and commercial property transactions above £145,000, with rates structured to be more proportionate to actual property values than the previous system.

The critical distinction in LBTT divorce v cohabitation Scotland law lies in the available exemptions and protections. Married couples benefit from specific legislative protections, while cohabiting couples face a more complex legal landscape with limited automatic rights.

LBTT Divorce Exemptions: Protection for Married Couples

Understanding LBTT divorce v cohabitation Scotland exemptions is crucial for protecting your financial interests during a relationship breakdown. Experienced divorce lawyers frequently guide clients through LBTT exemptions available during marriage dissolution.

Under current Scottish legislation, certain transactions related to the dissolution of a marriage or civil partnership are exempt from LBTT. This provides significant financial relief during an already challenging time.

Divorce and separation exception applies when specific conditions are met:

• Two dwellings owned at the end of the effective date
• The first dwelling was previously the main residence shared with a spouse or civil partner
• The first dwelling remains the main residence of the former spouse or civil partner
• There is no intention to live together again
• Ownership retention results from a court order or formal agreement in connection with dissolution or annulment

This exemption recognises that such transfers aren’t voluntary purchases but necessary legal arrangements mandated by divorce proceedings.

Divorce lawyers ensure all documentation meets Revenue Scotland requirements to secure these valuable exemptions.

LBTT and Cohabitation: Understanding Limited Legal Protections

The LBTT divorce v cohabitation Scotland comparison reveals significant disparities in legal protection. Unlike married couples, cohabitants face substantial challenges regarding property rights and LBTT implications.

In Scotland, there exists a restricted framework of rights for cohabitants under the Family Law (Scotland) Act 2006. No automatic recognition equivalent to marriage exists, creating vulnerability during property transactions.

Current cohabitation rights include the ability to seek court orders requiring payment of capital sums or financial support for child care after cohabitation ends.

However, claims must be made within strict timeframes:

• 12 months for separation claims
• 6 months for death-related claims

The Scottish Law Commission has recently published recommendations for reform. These include redefining cohabitation as “living together as a couple in an enduring family relationship” and enhanced court powers, including property transfer orders and pension sharing.

These proposed changes may provide better protection in future, butthe  current law remains limited.

Additional Dwelling Supplement: Major Changes for 2024-2025

The Additional Dwelling Supplement (ADS) landscape has transformed significantly, affecting both divorcing couples and cohabitants purchasing additional properties. These changes directly impact LBTT divorce v cohabitation Scotland planning strategies.

Rate increase to 8% took effect from 5 December 2024, representing a substantial increase from the previous 6% rate. This applies when purchasing residential properties over £40,000 while already owning another residential property.

Extended 36-month timeline replaced the previous 18-month window from 1 April 2024.

Buyers can now sell a Previous Main Residence 36 months before or after the effective date to qualify for ADS relief. This provides much greater flexibility during relationship transitions.

Ownership threshold changes now focus on your actual share of ownership rather than total property value.

Previously, any dwelling worth £40,000+ counted regardless of your ownership percentage. This has changed to examine your specific share value, providing fairer treatment for partial property owners.

From multi-million-pound divorces to international child relocation, handling a wide range of complex and sensitive cases is routine. Also dealing with numerous straightforward situations where people have reached an agreement and just need legal guidance to formalise arrangements.

Alternatively, clients seek help navigating these challenging times with clarity and confidence.

Track record speaks for itself. Over 50 years of combined experience has taught us that every family situation is unique.

However, the principles of achieving fair, lasting solutions remain constant. Seeing it all, solving it all, and ready to put that expertise to work for you.

With this trusted expertise, divorce lawyers & solicitors are here to help you achieve the best possible outcome for your unique situation.

Why Choose Family Law Specialists

At Rooney Family Law, providing compassionate and practical legal support during some of life’s most challenging times is our commitment.

Family disputes are not just about legal issues – they are deeply personal and can have a profound impact on your life, your loved ones, and your future. You are not just another case number to us.

Losing sleep, worrying about children’s future, and financial security concerns are natural responses. That is why focusing solely on family law, offering specialist expertise to help navigate these situations with clarity and confidence, makes sense.

Every phone call is answered by someone who understands family law. Every email gets a response within hours, not days. Each consultation is thorough, honest, and focused on getting the best possible outcome with minimal stress and maximum efficiency.

Ensuring that every client feels supported and empowered to achieve the best possible outcome is the mission. Whether negotiating financial settlements, resolving disputes over children, or seeking guidance on separation, the goal is to minimise conflict and stress while avoiding unnecessary delay or expense.

For authoritative guidance on LBTT regulations, visit the official Revenue Scotland LBTT guidance and Scottish Government family law policies.

Last updated: May 2025 | Word count: 1,298

Tags: cohabitation, divorce