Land and Buildings Transaction Tax (Scotland) Act 2013 section Schedule 19 paragraph 17

Deposits and loans in connection with lease grants and assignations

Schedule 19 paragraph 17 deals with how deposits and loans connected with the grant or assignation of a lease are treated for LBTT purposes, and the circumstances in which a deposit exemption applies.

• Deposits or loans paid in connection with a lease grant or assignation are treated as non-rent consideration if their repayment depends on the tenant's or assignee's actions, omissions, or death.
• A deposit exemption applies where the deposit amount is no more than twice the highest annual rent payable under the lease (or the remaining lease term, in the case of an assignation).
• When calculating the highest annual rent, any estimates for variable or uncertain rent should be taken into account, but any deemed rent reductions for overlapping lease periods should be ignored.
• LBTT does not become chargeable solely because of the rule that removes the nil rate tax band where the relevant rent attributable to non-residential property is £1,000 or more per year.