Regulations creating an exemption from Land and Buildings Transaction Tax (LBTT) for transactions in units of a co‑ownership authorised contractual scheme (CoACS) have been approved and come into force on 1 April 2026. The measure inserts a new paragraph 7A into schedule 1 of the Land and Buildings Transaction Tax (Scotland) Act 2013 to set out the exemption in statute. (parliament.scot) MSPs approved the affirmative instrument on 18 February 2026, clearing the final parliamentary stage ahead of commencement. (parliament.scot)
The exemption covers the creation, issue, transfer, redemption and cancellation of units in a CoACS. It does not extend to the acquisition by a scheme of a chargeable interest in Scottish land or property, which remains within LBTT’s scope. (legislation.gov.uk)
For the purposes of the exemption, a “co‑ownership authorised contractual scheme” is a co‑ownership scheme authorised under the Financial Services and Markets Act 2000 by an authorisation order under section 261D(1). “Co‑ownership scheme” is defined in section 235A of FSMA 2000, and “units” in section 237. (legislation.gov.uk)
Scottish Ministers state that investor‑level unit events in a CoACS should be tax‑neutral for LBTT because they do not, in themselves, alter the scheme’s direct ownership of land in Scotland. That policy intent was set out to the Finance and Public Administration Committee by the Minister for Public Finance during scrutiny. (parliament.scot)
The Finance and Public Administration Committee’s report records the Scottish Fiscal Commission’s view that the change is tax‑neutral overall, with a negligible effect on LBTT revenues. The Committee recommended approval of the instrument. (parliament.scot)
In practice, fund operators and advisers should confirm two points when applying the exemption: first, that the vehicle is an FCA‑authorised CoACS (evidence of an authorisation order under FSMA 2000 s261D will be central); second, that the event is limited to unit creation, transfer, redemption or cancellation rather than a property acquisition by the scheme. (legislation.gov.uk)
Timing matters. The regulations commence on 1 April 2026, so transaction teams should check the effective date attached to any unit events falling around quarter‑end to ensure the exemption is correctly applied once in force. (legislation.gov.uk)
This change sits within a broader LBTT programme. The Scottish Government laid the instrument on 7 January 2026 and confirmed in the Scottish Budget 2026‑27 that LBTT rates and bands are being maintained. A July 2025 consultation also sought views on Reserved Investor Funds and seeding relief; those elements remain under consideration. (gov.scot)
What does not change is equally important: any direct acquisition of Scottish property by a CoACS remains a chargeable transaction for LBTT, and the Additional Dwelling Supplement continues to apply where the statutory conditions are met. (legislation.gov.uk)