Scotland will exempt the creation, issue, transfer, redemption and cancellation of units in co‑ownership authorised contractual schemes (CoACS) from Land and Buildings Transaction Tax (LBTT) from 1 April 2026. The Policy Note on legislation.gov.uk confirms the unit‑level exemption and makes clear that a fund’s direct acquisition of Scottish property stays within LBTT. The Finance and Public Administration Committee has already recommended approval of the draft instrument. (legislation.gov.uk)

What is being changed is narrow but useful. CoACS are FCA‑authorised contractual schemes structured as co‑ownership vehicles under the Financial Services and Markets Act 2000; investors hold units representing undivided interests in the scheme’s assets. The regulations insert a new paragraph 7A into Schedule 1 of the LBTT Act 2013 so that unit activity is treated as an exempt transaction. (legislation.gov.uk)

For property fund managers, that removes the risk that ordinary subscriptions, redemptions or secondary transfers between institutional investors could attract a Scottish property transaction charge simply because the fund holds land. In other words, capital can move in and out of an authorised CoACS without LBTT friction at the unit level, while the tax still bites where it is meant to-on land deals themselves.

Important guardrails remain. When a CoACS buys or sells a building in Scotland, standard non‑residential LBTT rates continue to apply-currently 0% up to £150,000, 1% between £150,001 and £250,000, and 5% above £250,000. Where relevant, the Additional Dwelling Supplement (ADS) remains at 8%. The exemption is about units, not the property. (gov.scot)

A practical example helps. If a pension scheme subscribes £50 million for new units in a CoACS that already owns Scottish logistics assets, that unit issuance will not trigger LBTT after 1 April. But if the fund later acquires a £40 million warehouse near Glasgow, LBTT is due on that purchase as usual. This separation between unit flows and property transactions is the policy intention, stated by the Government in the Policy Note. (legislation.gov.uk)

The change follows a July 2025 consultation that examined CoACS treatment alongside proposals for a Reserved Investor Fund and potential seeding relief. Ministers have moved first on the unit exemption; broader seeding relief is still being considered and is not part of these regulations. (gov.scot)

For investors, the operational impact is most visible in rebalancing. Insurers, pension schemes and local authority pools allocating to Scottish real estate via CoACS should find inflows and outflows simpler to schedule, with fewer tax workarounds at dealing points. Liquidity remains driven by asset‑level transactions, but the compliance burden on unit trades eases.

The fiscal backdrop matters. The Scottish Fiscal Commission’s January 2026 forecast puts LBTT receipts at around £1.049 billion in 2026‑27, rising over the medium term. Because property purchases remain taxable, the revenue effect of exempting unit transactions should be modest-a tidying exercise rather than a material base‑erosion measure. (fiscalcommission.scot)

For fund operators and advisers, the immediate tasks are housekeeping: reflect the exemption in offering documents and investor letters from 1 April 2026, keep LBTT processes for direct property deals unchanged, and confirm that any vehicle in scope is an authorised CoACS under FSMA (section 261D). That ensures transactions truly involve units, not chargeable interests in land. (legislation.gov.uk)

One final point of context for readers south of the border: SDLT has not applied in Scotland since April 2015, when LBTT took over. This update stays within that framework-clarifying fund‑unit treatment while leaving the core property tax intact. (gov.uk)