LBTT6013 – Tax rates and bands

LBTT guidance on the tax rates and bands which apply to the rent and premium in a land transaction involving a lease.

In her Budget statement to Parliament on 06 February 2020, the Minister for Public Finance & Digital Economy, Kate Forbes, proposed changes to LBTT tax rates and bands for non-residential lease transactions. These changes take effect from 07 February 2020.

We have developed an online tax calculator for help in working out the amount of LBTT payable on lease transactions. This calculator is for reference purposes only.

Lease transaction rates and bands for transactions on or after 07 February 2020 

 NPV of rent payable  Rate of tax to apply
 Up to £150,000  0%
 Above £150,000 to £2,000,000  1%
 Above £2,000,000  2%

Lease transaction rates and bands for transactions prior to 07 February 2020

 NPV of rent payable  Rate of tax to apply
 Up to £150,000  0%
 Above £150,000  1%

LBTT(S)A 2013 schedule 19, paragraph 3-7 provides for the calculation.

Transitional Provisions

Where the effective date of a lease transaction is on or after 07 February 2020 and the agreement for lease/missives of let for the lease transaction were entered into on or before 05 February 2020, the tax rates and bands for lease transactions that were in force prior to 07 February 2020 will apply.

Please see LBTT6040 for more information.

Lease Premiums

LBTT may also be payable on chargeable consideration other than rent, such as a premium. In such cases, the standard tax rates and bands for non-residential property transactions apply to any payments other than rent under a lease:

Transactions on or after 25 January 2019

 Purchase price  LBTT rate
 Up to £150,000  0%
 Above £150,000 to £250,000  1%
 Above £250,000  5%

Transactions prior to 25 January 2019

 Purchase price  LBTT rate
 Up to £150,000  0%
 Above £150,000 to £350,000  3%
 Above £350,000  4.5%

Transitional Provisions

Please note that where the effective date of a land transaction is on or after 25 January 2019 and the contract for the land transaction was entered in to prior to 12 December 2018, the tax rates and bands for non-residential transactions that were in force to 25 January 2019 will apply.

Please note that where the ‘relevant rent’ (in other words the average rent) is at least £1,000 per annum, the nil rate tax band does not apply in relation to the premium. All such consideration will be taxed at the tax rate of the next tax band. In such cases, there is no nil rate and the first £150,000 will be taxed at the rate of the following band depending on the rate in force at the effective date.

 

Ref ID: 
LBTT6013
Archive Date: 
6 February 2020
Last updated: 
6 February 2020

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