Example:

JAMC Limited decides to purchase licensed premises which includes a separate flat above the licensed premises. The company intend to rent this flat out. The total purchase price is £1,100,000. The ADS will apply to the transaction, but only on the amount of the purchase price relating to the residential element (i.e. the flat) of the transaction and only if this figure is £40,000 or more.

A just and reasonable apportionment of the purchase price results in the licensed premises being valued at £800,000, stock, fixtures and fittings valued at £200,000 and the flat being valued at £100,000.

In this case, the non-residential rates of LBTT will apply to the total consideration (excluding the value of the fixtures and fittings and the stock) of £900,000, resulting in £21,750 of LBTT being due.

As that part of the transaction comprising the flat has been valued at £100,000, the "relevant consideration" for the purposes of the ADS is £100,000. ADS at a rate of 3% is therefore payable on the whole of this £100,000 resulting in an ADS of £3,000 being due in addition to the standard LBTT.

The overall LBTT liability for the transaction is therefore £24,750 (£21,750 plus £3,000).

Last updated: 
6 April 2016
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