Scotland has confirmed an exemption from Land and Buildings Transaction Tax (LBTT) for investor‑level dealings in co‑ownership authorised contractual schemes (CoACS) from 1 April 2026. The change covers the creation, issue, transfer, redemption and cancellation of units and is designed to remove friction where unit trades do not alter the scheme’s underlying ownership of Scottish property. (legislation.gov.uk)

A CoACS is an FCA‑authorised contractual fund set up as a co‑ownership scheme under the Financial Services and Markets Act 2000. In broad terms, investors co‑own the assets via “units”, with an operator managing the scheme and a depositary safeguarding assets. Authorisation is by order under section 261D(1) FSMA; “co‑ownership scheme” and “units” are defined in sections 235A and 237 respectively. (legislation.gov.uk)

Technically, the Regulations insert a new paragraph 7A into Schedule 1 of the LBTT(S) Act 2013 so that unit creation, issue, transfer, redemption or cancellation within a CoACS is treated as an exempt transaction for LBTT purposes. That means no LBTT liability or return arises purely because investors buy, sell, subscribe or redeem units. (legislation.gov.uk)

Crucially, the exemption stops at the fund level gate. When a CoACS acquires a “chargeable interest” in Scottish land or property, the usual non‑residential LBTT rules still apply; only investor‑level unit moves are out of scope. The policy intent is clarity, not a property tax holiday. (legislation.gov.uk)

This follows a 2025 consultation on LBTT and property investment funds and is framed to support investment while keeping asset‑level transactions taxable. The Government’s policy note also confirms the measure proceeds by affirmative procedure and takes effect on 1 April 2026. (gov.scot)

On timing and impact, the Scottish Parliament’s Finance and Public Administration Committee considered the draft on 3 February 2026 and recommended approval. The Scottish Fiscal Commission judged the revenue effect to be negligible, consistent with the aim of investor‑level tax neutrality. (parliament.scot)

For context, England and Northern Ireland already treat CoACS units akin to shares for stamp taxes and apply SDLT at the asset level, with a specific “seeding relief” for property moved into a CoACS. Scotland has opted to clarify investor‑level LBTT now, while work on possible RIF and seeding reliefs under LBTT remains under consideration. (gov.uk)

What this means in practice for managers and depositaries is straightforward: unit dealing, rebalancing between investors, and in‑specie redemptions that only change who holds units should not trigger LBTT from 1 April 2026. Operating documents, dealing forms and investor FAQs may need a light refresh to reflect the exemption and to confirm that LBTT continues to apply when the scheme actually buys Scottish property. (legislation.gov.uk)

Consider a simple example. A pension fund sells £10 million of CoACS units to an insurance company while the scheme continues to hold the same Scottish logistics assets. From 1 April, that secondary trade is LBTT‑exempt. If, a week later, the CoACS acquires a new Scottish warehouse, the purchase itself remains within LBTT at non‑residential rates and bands in the normal way. (gov.scot)

For property investment vehicles weighing structures, the move reduces uncertainty around CoACS unit liquidity in Scotland. It narrows a perceived gap with the SDLT treatment south of the border, without pre‑judging wider choices on RIFs or future seeding rules. For investors, the headline is clean: dealing in units is out; buying property in the scheme is still in. (gov.uk)

What to watch next: Revenue Scotland guidance updates ahead of 1 April, any follow‑up on Reserved Investor Funds and seeding relief, and whether managers use the clearer tax position to reorganise joint‑venture holdings into CoACS platforms. For now, the compliance lift is light and the direction of travel is clearer for fund‑level trades. (gov.scot)