What does Schedule 15 paragraph 1 of the Land and Buildings Transaction Tax (Scotland) Act 2013 provide?

Paragraph 1 of Schedule 15 provides that a land transaction entered into to comply with a planning obligation, or a modification of one, is exempt from LBTT. The exemption recognises that such transfers are legally required rather than voluntary commercial transactions. It applies only where specified qualifying conditions are satisfied.

Why are land transactions related to planning obligations exempt from LBTT in Scotland?

These transactions are exempt because they are not truly commercial in nature. The developer transfers land because they are legally required to do so under a planning obligation imposed by the local authority as a condition of planning permission, not because they have chosen to transact on the open market.

Does the LBTT planning obligation exemption apply automatically to all planning-related land transfers?

No, the exemption is not automatic. It only applies where the qualifying conditions set out elsewhere in Schedule 15 are satisfied. It is important to verify that these conditions are met before treating a transaction as exempt, as failure to do so could result in an unexpected LBTT liability.

Can the LBTT exemption apply to modifications of planning obligations as well as original obligations?

Yes, the exemption covers land transactions entered into to comply with both an original planning obligation and a modification of an existing planning obligation. In either case, the transaction must meet the qualifying conditions specified in Schedule 15 for the exemption to apply and for no LBTT to be chargeable.

Land and Buildings Transaction Tax (Scotland) Act 2013 Schedule 15 paragraph 1

Exemption for land transactions relating to planning obligations

Schedule 15, paragraph 1 provides that a land transaction carried out to comply with a planning obligation (or a modification of one) is exempt from LBTT, provided certain qualifying conditions are satisfied.

A land transaction entered into to fulfil a planning obligation may be exempt from LBTT.
The exemption also applies where the transaction is carried out to comply with a modification of a planning obligation.
The exemption is not automatic — it only applies if specified qualifying conditions are met.
Where the exemption applies, no LBTT is chargeable on the transaction.

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