Scotland has introduced a targeted Land and Buildings Transaction Tax (LBTT) exemption for investor‑level transactions in co‑ownership authorised contractual schemes (CoACS). The Scottish Parliament approved the regulations on 18 February 2026, with commencement on 1 April 2026. (parliament.scot)

The change adds a new exempt category for the creation, issue, transfer, redemption and cancellation of units in a CoACS. Crucially, it does not extend to a scheme’s direct purchase of property: acquisitions of chargeable interests by the fund remain fully within LBTT. (kpmg.com)

Ministers framed the move as recognising that a unit trade is not, in itself, a land deal. In committee evidence, the Minister for Public Finance said investor‑level transactions should be tax‑neutral for LBTT where the underlying property stays inside the scheme, removing unnecessary tax and administrative friction. (parliament.scot)

The policy was signposted in the 2025–26 Scottish Budget, which said the aim was to provide consistency with arrangements elsewhere in the UK. For cross‑border managers running pan‑UK funds, that alignment reduces ambiguity when onboarding or redeeming investors in Scottish property sleeves. (gov.scot)

For a Glasgow‑based manager operating an open‑ended property CoACS, the day‑to‑day impact is straightforward: subscriptions, redemptions or secondary transfers of units should no longer trigger LBTT or an LBTT return at the investor level. The property deal inside the fund is a separate question-LBTT still applies when the scheme acquires Scottish assets. (parliament.scot)

Only authorised contractual schemes qualify. In practice, that means a co‑ownership scheme authorised under section 261D of the Financial Services and Markets Act 2000 (FSMA), with ‘co‑ownership scheme’ and ‘units’ taking their meaning from FSMA. The Scottish Government’s consultation confirmed the intention to anchor the definitions to FSMA so operators have FCA‑regulated certainty. (gov.scot)

Nothing else about LBTT rates and bands changes because of this measure, and the non‑residential regime continues as is. The exemption simply clarifies investor‑level treatment; property transactions undertaken by the fund remain taxed in the usual way. (kpmg.com)

This sits alongside a wider LBTT review and a live workstream on fund‑related reliefs. Ministers are still considering seeding relief and a Reserved Investor Fund (RIF) model for Scotland; both were consulted on in 2025 but are not part of this instrument. Expect updates later in the Parliament. (kpmg.com)

For context, Scotland has run its own property transfer tax since 1 April 2015, when LBTT replaced Stamp Duty Land Tax (SDLT) north of the border. That matters for UK‑wide fund structures: SDLT rules do not apply to Scottish land transactions, so managers must run separate Scottish LBTT checks. (revenue.scot)

What should managers do before 1 April? Refresh prospectuses and investor letters to reflect the exemption; confirm with depositaries and administrators that unit transactions in CoACS will no longer require LBTT filings; and keep standard property‑level LBTT modelling for acquisitions in Scotland. That prep work should make quarter‑end flows smoother without altering deal‑level diligence.