Example:

A ten year lease with an annual rent of £100,000 was executed on 1 August 2013. An SDLT return was submitted and resultant tax paid.

On 1 August 2015, a minute of variation was executed to extend the lease for a further 5 years. This is treated for LBTT purposes as the grant of a new lease under Article 13 of The Land and Buildings Transaction Tax (Transitional Provisions) (Scotland) Order 2014.

The effective date will be the date the minute of variation was executed, 1 August 2015. An LBTT return is required by the filing date of 31 August 2015.

The chargeable consideration will be all of the additional rent payable under the extended five year period. 

The net present value (NPV) is calculated using the £100,000 payable in each of the five extended years. This results in a NPV of £451,505.24.

Using the rates and band for leases, the total tax chargeable would be:

(£150,000 x 0%)+(£301,505.24 x 1%) = £3,015.

The date of the first three yearly review will be the third anniversary of the effective date of the transaction, 1 August 2018. This return must be made to us by the filing date of 31 August 2018.

Last updated: 
12 January 2016
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